Fragmental Co

Multiple Choice

Fragmental Co. leased a portion of its store to another company for eight months beginning on October 1, at a monthly rate of $800. Fragmental collected the entire $6,400 cash on October 1 and recorded it as unearned revenue. Assuming adjusting entries are only made at year-end, the adjusting entry made by Fragmental Co. on December 31 would be:

A) A debit to Rent Revenue and a credit to Cash for $2,400.
B) A debit to Rent Revenue and a credit to Unearned Rent for $2,400.
C) A debit to Unearned Rent and a credit to Rent Revenue for $4,000.
D) A debit to Unearned Rent and a credit to Rent Revenue for $2,400.
E) A debit to Cash and a credit to Rent Revenue for $6,400.