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    faith760's Avatar
    faith760 Posts: 1, Reputation: 1
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    #1

    Sep 25, 2010, 08:07 PM
    Unearned service revenue still unearned is it a debit or credit
    Prepaid rent still in force $400 but on the trial balance sheet it states prepaid rent 2,700 do I subtract -debit 400 or credit 400
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Sep 26, 2010, 10:24 AM

    Unearned Revenue is a Liability and liabilities have a normal credit balance. Prepaid Rent is a Current Asset and assets have a normal debit balance. When you decrease a liability you debit the account and when you decrease an asset you credit the account.
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #3

    Sep 17, 2011, 07:04 AM
    You did not give enough informaation in your problem to determine what to do.

    From the information provided by you, you have $400 in Prepaid rent and you paid $2,300 in advance for rent. The journal entry to record this is:
    Ebit Prepaid Rent for 2,300
    Credit Cash for 2,300

    You do not do anything with the $400 until you have used the rent.

    Obviously you did not read your problem and did not look at all the information provided in the problem!

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