Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Can anyone explain why to subtract A/R with Unearned Rentals? I don't really understand how the answer key solves this question. May be a T-account
Can anyone explain why to subtract A/R with Unearned Rentals? I don't really understand how the answer key solves this question. May be a T-account would be helpful. Thank you.
Tara Co. owns an office building and leases the offices under a variety of rental agreements involving rent paid in advance monthly or annually. Not all tenants make timely payments of their rent. Tara's balance sheets contained the following data: Year 1 Year 2 Rent Receivable $9,600 $12,400 Unearned Rent 32,000 24,000 During Year 2, Tara received $80,000 cash from tenants. What amount of rental revenue should Tara record for Year 2? $85,200 Explanation $69,200 Asset Rentals Receivable Liability Unearned Rentals Net Unearned Rentals $74,800 $90,800 Beginning balance at end of Year 1 9,600 32,000 = 22,400 Add cash collections 80,000 Subtotal 102,400 Less rental revenue earned (90,800) - SQZ Ending balance at end of Year 2 12,400 - 24,000 = 11,600Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started