How do you record this???? ++++++++++++++++++++++?

Question

We're doing Adjusting Entries in my accounting class.

How would you record "Prepaid rent still in force, $1,050" ?

I debited rent expense and credited prepaid rent. Apparently that's wrong. So what would I DEBIT and CREDIT?

Same question for "Unearned commission revenue still unearned, $7,750"...

I'd really appreciate it if someone helped me on this. It's for a big accounting project. I need to know what I'm doing wrong. : (

With the unearned commission revenue, I debited unearned service revenue and credited service revenue. That's wrong too.

How would I record that?

Answer 1

Depends if you are paying rent or you are the landlord. I am assuming that you are the one paying rent.

Adjusting entry:

Rent Expense: Debit (Original Balance) - $1,050
Prepaid Rent Asset: Credit (Original Balance)-$1,050

Note: You do debit the expense and credit the prepaid asset to recognize the passage of time. I would fathom that you got the amounts wrong on the adjusting entry, because the question is worded a bit tricky by making you back into the amount you need to debit/credit.

Answer 2

When you paid the rent, the debit would have been to Prepaid Rent and credit to cash. As the rent expires, you would debit rent expense and credit prepaid rent. The amount not yet expired would remain as prepaid.

Unearned revenue would remain in that account and credited to income as it is earned.

This is the best i can do with the limited information.