Suppose a customer rents a vehicle for four months from Rent-A-Car on October 1, paying $4,400 ($1,100/month). Record Rent-A-Car's adjusting entry on December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

On December 31, Rent-A-Car should record revenue by the adjusting entry:

Debit Unearned revenue $3,300

Credit Revenue $3,300

Explanation:

Following the Accrual accounting - an accounting method that revenue or expenses are recorded when a transaction occurs rather than when payment is received or made.

A customer rents a vehicle for four months from Rent-A-Car on October 1, paying $4,400 ($1,100/month). On December 31, Rent-A-Car should record revenue by the adjusting entry:

Debit Unearned revenue $3,300

Credit Revenue $3,300

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