somerset received $57,600 from a customer for 12 months rent in advance of the rental period. how should…

somerset received $57,600 from a customer for 12 months rent in advance of the rental period. how should somerset record this transaction? multiple choice account title debit credit cash 57,600 rent revenue 57,600 account title debit credit deferred rent revenue 57,600 rent revenue 57,600 account title debit credit cash 57,600 deferred rent revenue 57,600 account title debit credit rent revenue 57,600 deferred rent revenue 57,600 < prev 6 of 25 next >

somerset received $57,600 from a customer for 12 months rent in advance of the rental period. how should somerset record this transaction? multiple choice account title debit credit cash 57,600 rent revenue 57,600 account title debit credit deferred rent revenue 57,600 rent revenue 57,600 account title debit credit cash 57,600 deferred rent revenue 57,600 account title debit credit rent revenue 57,600 deferred rent revenue 57,600 < prev 6 of 25 next >

Answer

Brief Explanations:

When a company receives rent in advance, it has an obligation to provide the rental service in the future. Cash is received, so the Cash account is debited for the amount received ($57,600). Since the rent revenue is not yet earned (as the rental period has not started), a liability account called Deferred rent revenue is credited. This reflects the company's obligation to provide the service over the 12 - month period.

Answer:

C.

Account Title Debit Credit
Cash 57,600
Deferred rent revenue 57,600