9-4
Office Rental, Inc. owns an office building that it rents to Watson Company. The building is in a
location that is not very desirable. To provide an incentive for Watson to rent the building, Office
Rental, Inc. collects rent at the end of each 6 months. The following is data for the office building:
Office Building – Located at 123 ItsADump Drive
Rental rate ........................................................................................ $450 per month
Date when the 6 months of rent for January to June is collected ...... June 30
Date when the 6 months of rent for July to December is collected .... December 31
The office building located at 123 ItsADump Drive is the only rental property owned by Office
Rental, Inc.
After making the April 30, 2021 Rent Receivable adjusting entry, the balance in Office Rental Inc.’s
Rent Receivable account is $1,800. This balance represents 4 month’s (Jan., Feb., Mar., Apr.) of
rent due from Watson.
The following is a partial list of the accounts in Office Rental Inc.’s General Ledger. These are the
only accounts you need for this problem.
Cash
Rent Receivable (asset account)
Rent Revenue (revenue account
Requirement 1
Prepare the May 31, 2021 General Journal adjusting entry to accrue May’s Rent Receivable.
Requirement 2
What would be the amount of Rent Receivable shown on Office Rental Inc.’s Balance
Sheet as of May 31, 2021?
What would be the amount of Rent Revenue on Office Rental Inc.’s Income Statement for
the period May 1 to May 31, 2021?
Requirement 3
Prepare the June 30, 2021 General Journal entry to record the receipt of cash by Office Rental,
Inc. from Watson for the 6 months of rent from January to June.
Hint: The account names have been put in the General Journal.