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Murphy Company sublet a portion of its warehouse for five years at an annual rental of $60,000, beginning on May 1, 2014. The tenant, Sheri Charter, paid one year's rent in advance, which Murphy recorded as a credit to Unearned Rent Revenue. Murphy reports on a calendar-year basis. The adjustment on December 31, 2014 for Murphy should be

Respuesta :

TomShelby

Answer:

adjusting entry:

unearned rent revenue 40,000 debit

 rent revenue  40,000 credit

to record accrued rent revenue

Explanation:

contract value for 1 year 60,000

1 month of rent   60,000/ 12 = 5,000

How many month past from May to december?

months through may to december 8 months

value of 8 month of rent= 40,000

this will be the earned portion of the contract

balance unearned rent revenue at year end:

60,000 - 40,000 = 20,000

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