Unearned Rent Revenue Normal Balance

The normal balance of unearned rent is typically a liability credit entry.

Unearned rent revenue normal balance. Debit column of the income statement section. In the month of cash receipt the transaction does not appear on the landlord s income statement at all but rather in the balance sheet as a cash asset and an unearned income liability. An unearned rent revenue account with a normal balance would be reported in which column of a worksheet. Multiple choice credit column of the balance sheet section.

Let s illustrate revenue accounts by assuming your company performed a service and was immediately paid the full amount of 50 for the service. If an account has a debit balance of 890. By crediting unearned income we are recording a liability for 24 000. Which of the following describes the classification and normal balance of the unearned rent revenue account.

Unearned revenue is a liability for the recipient of the payment so the initial entry is a debit to the cash account and a credit to the unearned revenue account. Credit column of the income statement section. Unearned revenue is a liability and is included on the credit side of the balance sheet. The balance will show up in the post closing trial of the balance sheet.

Debit column of the balance sheet section. The normal balance of any account is the balance debit or credit which you would expect the account have and is governed by the accounting equation. Hence contra revenue accounts will have debit balances. Accounts with balances that are the opposite of the normal balance are called contra accounts.

The information all the accounts have normal balances. Unearned revenues are recognized when customers pay up front for the products services. Each of the accounts in a trial balance extracted from the bookkeeping ledgers will either show a debit or a credit balance. The balance of service income is now 6 000 30 000 24 000 which is actually the 20 portion already earned.

Unearned revenue is money received from a customer for work that has not yet been performed. Credit prepaid insurance 3 600 supplies 2 800 equipment 25 000 accumulated depreciation equipment 8 400 notes payable 20 000 unearned rent revenue 9 900 rent revenue 60 000 interest expense 0.