on June 1, 2018, Herbal co. received $40,460 for the rent of land for 12 months. Journalize the adjusting entry required for unearned rent on December 31, 2018. Round your answers to the nearest dollar amount.
The entry recognized in the books as at June 1, 2018, is as follows: AJE:_____ Dr. Cash $40,460 Cr. Rental Income $40,460 To record payment of rental from customer
However, since portion only is realized as at December 31, 2018, thus, adjusting journal entry should be made to adjust the unearned portion.
AJE:___ Dr. Rental Income $16,858 Cr. Unearned Rental Income $16,858 To adjust unearned rental income of 5 months
The unearned rental income is presented under Accounts Payable portion of the books.
