McCloud Realty Company Ltd received a cheque for $21,000 on 1 July, which represents six months rent received in advance. Revenue received in advance account was credited with $21,000. Financial statements will be prepared on 31 July. McCloud Realty Company Ltd should make the following adjusting entry on 31 July:

Select one:

a.

Debit Revenue received in advance, $3,500; Credit Rental revenue, $3,500

b.

Debit Rental revenue, $3,500; Credit Revenue received in advance, $3,500

c.

Debit Revenue received in advance, $21,000; Credit Rental revenue, $21,000

d.

Debit Cash, $21,000; Credit Rental revenue, $21,000

e.

None of the above