Ultra Realty Received a Cheque for $21,000 on July 1

Multiple Choice

Ultra Realty received a cheque for $21,000 on July 1, which represents a 6-month advance payment of rent on a building it rents to a client. Unearned Rental Revenue was credited for the full $21,000. Financial statements will be prepared on July 31. Ultra Realty should make the following adjusting entry on July 31:

A) debit Unearned Rental Revenue, $3,500; credit Rental Revenue, $3,500.
B) debit Rental Revenue, $3,500; credit Unearned Rental Revenue, $3,500.
C) debit Unearned Rental Revenue, $21,000; credit Rental Revenue, $21,000.
D) debit Cash, $3,500; credit Rental Revenue, $3,500.