ABC Co. leased a portion of its store to another company for eight months beginning on October 1, 2004. This other company paid the entire rent of $6,400 cash on October 1, which ABC Co. recorded as unearned revenue. The journal entry made by ABC Co. at year- end on December 31, 2004 would include:
A) A debit to Rent Earned for $2,400.
B) A credit to Unearned Rent for $2,400.
C) A debit to Cash for $6,400.
D) A credit to Rent Earned for $2,400.
E) A debit to Unearned Rent for $4,000.
Answer: D) A credit to Rent Earned for $2,400.
Business
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