Oriole Company sublet a portion of its warehouse for five years at an annual rental of $71400, beginning on May 1, 2025. The tenant, Elizabeth Brown, paid one year's rent in advance, which Oriole recorded as a credit to Unearned Rent Revenue. Oriole reports on a calendar-year basis. The adjustment on December 31, 2025 for Oriole should be
Oriole Company sublet a portion of its warehouse for five years at an annual rental of $71400, beginning on May 1, 2025. The tenant, Elizabeth Brown, paid one year's rent in advance, which Oriole recorded as a credit to Unearned Rent Revenue. Oriole reports on a calendar-year basis. The adjustment on December 31, 2025 for Oriole should be
College Accounting (Book Only): A Career Approach
13th Edition
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:Scott, Cathy J.
Chapter11: Work Sheet And Adjusting Entries
Section: Chapter Questions
Problem 8DQ
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Question
Oriole Company sublet a portion of its warehouse for five years at an annual rental of $71400, beginning on May 1, 2025. The tenant, Elizabeth Brown, paid one year's rent in advance, which Oriole recorded as a credit to Unearned Rent Revenue. Oriole reports on a calendar-year basis. The adjustment on December 31, 2025 for Oriole should be
Expert Solution
Step 1
Unearned rent revenue: It implies to the rent that is received by the landlord in advance at the beginning of the effective period. Until the rental period expires, it is recorded as a liability and at the end of the effective period in place, the rental income is recognized, and liability is reversed.
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