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Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,025. Fragmental

Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $1,025. Fragmental collected the entire $8,200 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be:

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  • A debit to Unearned Rent and a credit to Rent Revenue for $5,125.

  • A debit to Unearned Rent and a credit to Rent Revenue for $3,075.

  • A debit to Rent Revenue and a credit to Cash for $3,075.

  • A debit to Cash and a credit to Rent Revenue for $8,200.

  • A debit to Rent Revenue and a credit to Unearned Rent for $3,075.

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