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    tcm1770's Avatar
    tcm1770 Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Oct 21, 2008, 07:05 PM
    Adjusting a prepaid acct
    The following transaction pertains to the 2007 accounting period.

    How would I make the following adjusting entry?
    02/01 I rec'd 3600 of rent for one year paid in advance by a tenant.

    I am thinking
    Dr cash 3300
    Cr prepaid rent expense 3300

    Thanks
    hamzashakaa's Avatar
    hamzashakaa Posts: 161, Reputation: 8
    Junior Member
    		  
    #2

    Oct 21, 2008, 11:23 PM

    When you receive the money on feb the first you should record the following entry:

    Dr. Cash 3,600
    Cr. Unearned rent revenue 3,600
    Unearned rent revenue is a liability account that should be reduced each month. So on the end of feb you should record the following adjusting entry:

    Dr. Unearned revenue 300
    Cr. Rent revenue 300
    This entry should be performed each month
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