Homework Answers
As per the details mentioned in question, calculations are as under:
1. On collection of $ 4,800 of rent in advance journal entry will be:
| Date | Accounts | Debit | Credit |
| Cash A/c Dr | $ 4,800 | ||
| To Unearned Rent Revenue A/c | $ 4,800 |
As it can be seen Cash A/c and Unearned Rent Revenue A/c will be impacted.
Cash A/c's balance will be increased and Unearned Rent Revenue A/c's balance will be increased.
2. Rent revenue for 8 months is $ 4,800
Rent revenue for 1 month = $ 4,800 / 8
= $ 600
3. Accounting entry to be posted on earning of each month's rent revenue will be as under:
| Accounts | Debit | Credit |
| Unearned Rent Revenue A/c Dr | $ 600 | |
| To Rent Revenue A/c | $ 600 |
Unearned Rent Revenue A/c and Rent Revenue A/c will be impacted.
Unearned Rent Revenue A/c's balance will be decreased and Rent Revenue A/c's balance will be increased.
4. Rent revenue is collected for the month of September 2019 to April 2020 ( 8 months)
Rent revenue from the month of September 2019 to December 2019 will be reported on the Income Statement for the year ended December 31, 2019
Rent revenue for 1 month = $ 600
Rent revenue from the month of September 2019 to December 2019 = $ 600 * 4 = $ 2,400
Rent revenue for $ 2,400 will be reported on the Income Statement for the year ended December 31, 2019
5. Rent revenue from the month of January 2020 to April 2020 would be reported as Unearned Rent Revenue on the Balance sheet on December 31, 2019
Rent revenue for 1 month = $ 600
Unearned Rent Revenue for the month of January 2020 to April 2020 = $ 600 * 4 = $ 2,400
Unearned Rent Revenue for $ 2,400 would be reported as Unearned Rent Revenue on the Balance sheet on December 31, 2019
6. If the tenant did not renew the rental agreement at the end of 8 months then the amount of rent revenue earned by Trying to Get This, Corp. for the year 2020 will be the rent earned from the month of January 2020 to April 2020 i.e $ 2,400 ($ 600 rent per month * 4 months).
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