Questions: Current Attempt in Progress On September 1, 2023, Crane Corporation received 54600 cash from a tenant for one year's rent in advance and recorded the transaction with a credit to Rent Revenue. The December 31, 2023, required adjusting entry in connection with this would be debit Cash and credit Unearned Rent, 9100. debit Rent Revenue and credit Unearned Rent, 36400. debit Rent Revenue and credit Unearned Rent, 18200. debit Unearned Rent and credit Rent Revenue, 18200

The answer is: debit Rent Revenue and credit Unearned Rent, \$36,400.

Explanation for each option:

1. Debit Cash and credit Unearned Rent, \$9,100:

   • This option is incorrect because the cash was already received and recorded on September 1, 2023. The adjusting entry on December 31, 2023, should not involve cash but rather adjust the revenue recognition.

2. Debit Rent Revenue and credit Unearned Rent, \$36,400:

   • This is the correct option. Here’s why:
     • Crane Corporation received \$54,600 for one year's rent in advance on September 1, 2023.
     • This amount covers rent from September 1, 2023, to August 31, 2024.
     • By December 31, 2023, four months of rent (September, October, November, December) have been earned.
     • The earned rent for these four months is \(\$54,600 \times \frac{4}{12} = \$18,200\).
     • The remaining eight months of rent (January to August 2024) are unearned as of December 31, 2023.
     • The unearned rent for these eight months is \(\$54,600 \times \frac{8}{12} = \$36,400\).
     • Therefore, the adjusting entry should debit Rent Revenue and credit Unearned Rent for \$36,400 to reflect the unearned portion of the rent.

3. Debit Rent Revenue and credit Unearned Rent, \$18,200:

   • This option is incorrect because it reverses the amounts. The \$18,200 represents the earned rent, not the unearned rent. The adjusting entry should reflect the unearned portion.

4. Debit Unearned Rent and credit Rent Revenue, \$18,200:

   • This option is incorrect because it suggests that the unearned rent is being reduced by \$18,200, which is the amount of rent earned. However, the question asks for the adjusting entry to reflect the unearned rent, which should be \$36,400.

In summary, the correct adjusting entry on December 31, 2023, is to debit Rent Revenue and credit Unearned Rent for \$36,400.