ADVANCE COLLECTIONS FOR REVENUES WITH BEGINNING BALANCES.

Popovich Enterprises rents small refrigerators to students for their rooms. Popovich’s contracts are for 10 months at $5 per month (or $50 for the 10 months). Each contract is effective on August 1 and ends the following May 31. On January 1, 19x5, Popovich’s unearned rental revenue account had a credit balance of $11,250. During 19x5 Popovich collected $26,750 in advance from customers for these 10-month contracts for the 19x5—19x6 school year. The entire $26,750 was credited to unearned rental revenue.

REQUIRED:

1. What is the amount of 19x5 rent revenue for Popovich?

2. Prepare the adjusting entry necessary at December 31, 19x5. Prepare T-accounts

- to support your answer.