Question 16

Zippy Inc.received a cheque for $21,000 on July 1, which represents a 8-month advance payment of rent on a building it rents to a client. Unearned Revenue was credited for the full $21,000. Financial statements will be prepared on July 31. Zippy Inc. should make the following adjusting entry on July 31:

Select one:

a. debit Rent Revenue, $3,500; credit Unearned Revenue, $3,500.

b. debit Cash, $3,500; credit Rent Revenue, $3,500.

c. debit Unearned Revenue, $3,500; credit Rent Revenue, $3,500.

d. debit Unearned Revenue, $21,000; credit Rent Revenue, $21,000.