Joshua owns an apartment complex with 7 tenants. Each unit rents for $1,500 per month. At the end of April, three tenants were past due on paying their rent. Which of the following represents the correct adjusting journal entry Matt should make at the end of April?
Debit rent receivable $4,500; credit rent revenue $4,500.
the second answer correct Debit rent receivable $4,500; credit rent revenue $4,500
Well, it seems like Joshua's apartment complex has a case of the forgetful tenants! Let's see how we can solve this with a touch of humor.
Debit: Accounts Receivable (Forgetful Tenants)
Credit: Rental Income (the Reason We're All Here)
This adjusting journal entry will help Joshua keep track of those tenants who are a little behind on their payments. Remember, laughter is the best way to go through financial records!
To answer this question, we need to understand the situation and the purpose of the adjusting journal entry. In this case, the adjusting entry should reflect the amount of rent that has not yet been received from the three past due tenants.
The total amount of rent received in April can be calculated by multiplying the monthly rent of $1,500 by the total number of units, which in this case is 7. So, the total rent that should have been received in April is $1,500 * 7 = $10,500.
To determine the amount of rent that has not yet been received from the three past due tenants, we need to know how much they owe. Let's assume Tenant A owes $1,500, Tenant B owes $1,000, and Tenant C owes $2,000.
To find the total amount of rent that has not been received, we sum up the amounts owed by the three tenants:
$1,500 (Tenant A) + $1,000 (Tenant B) + $2,000 (Tenant C) = $4,500.
Now, the adjusting journal entry should reflect the fact that $4,500 of rent has not been received. To do this, we need to decrease the rent revenue account and increase the accounts receivable or a similar account.
Therefore, the correct adjusting journal entry should be:
Debit: Accounts Receivable (or relevant account) - $4,500
Credit: Rent Revenue - $4,500
Note that the specific account titles may vary depending on the company's chart of accounts.