Thompson Company Sublet a Portion of Its Office Space for Ten

Multiple Choice

Thompson Company sublet a portion of its office space for ten years at an annual rental of $36,000,beginning on May 1.The tenant is required to pay one year's rent in advance,which Thompson recorded as a credit to Rental Income.Thompson reports on a calendar-year basis.The adjustment on December 31 of the first year should be

A) Rental Income .......................12,000
Unearned Rental Income ............12,000
B) Rental Income .......................24,000
Unearned Rental Income ............24,000
C) Unearned Rental Income ..............12,000
Rental Income ....................12,000
D) Unearned Rental Income ..............24,000
Rental Income ....................24,000