Can someone show me how to go about these adjustment entries. I\'m really confus
ID: 2442478 • Letter: C
Question
Can someone show me how to go about these adjustment entries. I'm really confused.2. Unearned rent revenue $429,000. The company began subleasing office space in its new building on Nov. 1. Each tenant is required tp make a $5000 deposit that is not refundable until occupancy is terminated. At Dec. 31, the company had the following rental contracts that are paid in full for the entire term of the lease.
Date Term in months Monthly rent # of leases
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Nov. 1 6 $6000 5
Dec. 1 6 $8,500 4
3.Prepaid advertising $13,200. This balance consists of payment on two advertising contracts. The contracts provide for monthly advertising in two trade magazines. the terms of the contracts are as shown below.
Contracts Date Amount # of Magazine Issues
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A650 May 1 $6,000 12
B974 Oct. 1 7,200 24
The first advertisement runs in the month on which the contract is signed.
4. Notes payable $60,000. This balance consists of a note for one year at an annual interest rate of 12%, dated June 1.
Explanation / Answer
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1) November 1 (original entry)
Dr Cash 205,000
Cr Unearned Rent Revenue 180,000
Cr Security Deposits Payable 25,000
December 1 (original entry)
Dr Cash 224,000
Cr Unearned Rent Revenue 204,000
Cr Security Deposits Payable 20,000
Adjusting Entries (assuming no adjusting entries have been made since Nov 1)
Dr Unearned Rent Revenue 94,000 (2 months for the 5 $6,000 payments and 1 month for the 4 $8,500 payments)
Cr Rent Revenue 94,000
The security deposits are payables. The wouldn't be included as income.