Overview
Under the accrual basis of accounting, revenue must only be recognized when it is earned. Likewise, once the company receives the early cash payment for the rental service, it need to record the cash got as unearned rental revenue in the journal entry.The nature that unearned rent is a liability which the company owes to its customer or customer in offering the rent. Likewise, recording the unearned rent together revenue will an outcome of the overstatement of revenue ~ above the earnings statement and also the understatement of liabilities on the balance sheet.
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Unearned rent newspaper entry
The firm can make the unearned rent newspaper entry through debiting the cash account and also crediting the unearned rent revenue account.Unearned rent example
For example, ~ above December 29, 2020, the firm ABC receives very early cash payment of $2,000 for the rental residential or commercial property it gives to the client. The payment is for the rental dues in January 2021.In this case, the firm ABC demands to document the $2,000 that cash obtained as one unearned rental revenue in the journal entry on December 29, 2020.See more: Used 2005 Chevy Malibu Gas Tank Size, Chevrolet Malibu Gas Tank Size

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