1.10.2016 Cash Alc Dr. 7200 7200 To Rent Alc (Being rent received) b31 31.03.2017 Rent A/c Dr. 2400(800 x 3) To Unearned Income Ale 2400 (Being uneared income of three months) Note: In both the cases current years' income of rent is 4800 and unearned income is 2400. Second option has been taken into account for solving the question in the present chapter. Presentation in final accounts When uncarned income is given outside the trial balance as a footnote, it is shown in credit side of profit and loss account by way of deducting from respective income and sec adjustment is shown in liability side of balance sheet. If unearned income is shown in trial balance then it be shown in liability side only. The way of presentation of unearned income in final accounts is as follows: Profit and Loss Alc Dr. Cr. Particulars Amount By Income Less Unearned Income ***** + Balance Sheet Amount Liabilities Uncarned Income Illustration 2 The following information is available in Trial Balance of a Trader on 31.03.2017 Trial Balance as on 31.03.2017 Amount Particulars Dr. * Cr. 6% loan 40,000 Investment in 9% Debenture of Cipla Company 60,000 (Interest payable on 30th June and 31 st December) Interest on 6% loan received upto 31st Jnaury 2017 2000 Interest on Investment in 9% debenture (June and Dec.) 5400 Rent received for 12 months on october 1, 2016 12000 Accrued Interest on 9% debenture on 1.4.16 1350 Make necessary adjustment entires and show effect of them on final accounts