RTV Industries collects rent from several properties. Prior to recording adjusting entries, assume the rent revenue ledger account has a credit balance of $80,000. Two adjustments are made: (1) a receivable for accrued rent revenue of $6,000 is established, and (2) the unearned rent revenue ledger account is increased by $2,000. After posting these adjusting entries, the rent revenue ledger account should have a balance of:

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The problem starts with a rent revenue ledger balance of 80,000 on the credit side. We need to apply the two adjusting entries and see how each affects the rent revenue account.

Option a (a. $76,000): This would require a net decrease of 4,000 from the original 80,000. The two adjustments add a 6,000 credit for accrued rent revenue, which would increase the rent revenue balance if recorded as a credit. The second adjustment increases unearned revenue by 2,000, which, to increase unearned revenue, would be recorded with a debit to rent revenue (reducing rent revenue). Net effect would be +6,000 (from accrual) and −2,000 (from the revenue being moved to unearned), totaling +4,000. Therefore, 80,000 + 4,000 = 84,000, not 76,000. So this option is incorrect.

Option b (b. $84,000): This option matches the net effect we calculated. The accrued rent revenue of 6,000 increases rent revenue (credit 6,000), while increasing unearned revenue by 2,000 requires a debit to rent revenue of 2,000 (reducing rent revenue). The overall change is +6,000 − 2,000 = +4,000. Starting from 80,000, the new balance is 84,000. This aligns with the described adjustments, so this is the correct outcome.

Option c (c. $88,000): To reach 88,000, the net increase would have to be +8,000 from adjustments. However, the accrual adds +6,000 and the transfer related to unearned revenue reduces rent revenue by 2,000 (not adds), giving only +4,000 total. Therefore 88,000 would be incorrect.

Option d (d. Non of the other options): Since we can demonstrate that 84,000 is the result of the adjustments, this option cannot be correct.

Option e (e. $72,000): This would require a net decrease of 8,000. With the entries described, the net change is +4,000, not −8,000, so this option is clearly wrong.

MCD2160 - T1 - 2025 MCD2160 Trimester 1 2025 Mid Test Practice Quiz

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