Question: Journal entry worksheet
On November 1, the company rented space to another tenant. A check in the amount of $9,000, representing three months' rent in advance, was received from the tenant on that date. The payment was recorded with a credit to the Unearned Rent Revenue account.
1. **State the problem:**
The company received $9000 on November 1 for three months' rent in advance, recorded as a credit to Unearned Rent Revenue.
2. **Identify the accounts involved:**
- Unearned Rent Revenue (liability account) is credited when rent is received in advance.
- Rent Revenue (income account) is recognized monthly as the rent is earned.
3. **Calculate monthly rent earned:**
$$\text{Monthly Rent} = \frac{9000}{3} = 3000$$
4. **Journal entry for November rent recognition:**
- Debit Unearned Rent Revenue $3000$ to reduce the liability.
- Credit Rent Revenue $3000$ to recognize earned revenue.
5. **Explanation:**
Since the rent is for three months, each month $3000$ is earned and should be recognized as revenue, reducing the unearned rent liability accordingly.
**Final journal entry on November 30:**
\begin{align*}
\text{Debit} & : \text{Unearned Rent Revenue} & 3000 \\
\text{Credit} & : \text{Rent Revenue} & 3000
\end{align*}