Question
Prepare the appropriate adjusting journal entry as of December 31 if needed. On September 1, we agreed to rent additional warehouse space to TKO Company
Prepare the appropriate adjusting journal entry as of December 31 if needed.
On September 1, we agreed to rent additional warehouse space to TKO Company for three months. On September 1, TKO paid us the full three months rent of $3,300. When we received the $3,300, we debited cash and credited revenue for $3,300.
I had the answer as follows:
Debit - Revenue - 3300
Credit - Rent Revenue - 3300
The answer to my response being incorrect is:
As of December 31, Rent Revenue shoud be $3,300. Since this company already recorded revenue as $3,300 originally. You do not have to record an adjustment. Ask yourself the following questions:
What is the balance in revenue now? $3,300
What should the balance be? $3,300
How do I adjust it there? No entry, because it is already there.
This is all the information given to me for the question. Please explain why my answer is either wrong or should be correct for points.
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