
Concept Introduction:
Steps in Accounting cycle: Accounting cycle is the series of steps of accounting process which processes transactions into financial statements. The steps of accounting cycle are as follows:
- Collecting transactions and events
- Recording journal entries for transactions and events
- Posting the journal entries into ledgers
- Preparing unadjusted
trial balance from ledger balances - Recording
adjusting entries - Posting adjusting entries into ledgers and Preparing adjusted trial balance
- Preparing financial statements; Income statement,
balances sheet , statement of owner's equity andCash flow statements. - Preparing Closing entries to close temporary accounts.
- Preparing post closing trial balance
- Recording reversing journal entries (Optional)
Requirement-a:
To Prepare:
The

Answer to Problem 7.1ME
The Journal entry to record the collection of Rent in Advance is as follows:
Date | Account Titles | Debit | Credit |
Dec. 1, 2016 | Cash | $ 25,800 | |
Unearned Rent Revenue | $ 25,800 |
Explanation of Solution
The Journal entry to record the collection of Rent in Advance is explained as follows:
Date | Account Titles | Debit | Credit |
Dec. 1, 2016 | Cash | $ 25,800 | |
Unearned Rent Revenue | $ 25,800 | ||
(Being Rent received in advance) |
Concept Introduction:
Steps in Accounting cycle: Accounting cycle is the series of steps of accounting process which processes transactions into financial statements. The steps of accounting cycle are as follows:
- Collecting transactions and events
- Recording journal entries for transactions and events
- Posting the journal entries into ledgers
- Preparing unadjusted trial balance from ledger balances
- Recording adjusting entries
- Posting adjusting entries into ledgers and Preparing adjusted trial balance
- Preparing financial statements; Income statement, balances sheet, statement of owner's equity and Cash flow statements.
- Preparing Closing entries to close temporary accounts.
- Preparing post closing trial balance
- Recording reversing journal entries (Optional)
Requirement-b:
To Prepare:
The Journal entry to record the adjustment for Rent earned

Answer to Problem 7.1ME
The Journal entry to record the adjustment for Rent earned is as follows:
Account Titles | Debit | Credit |
Unearned Rent Revenue | $ 8,600 | |
Rent Revenue | $ 8,600 |
Explanation of Solution
The Journal entry to record the adjustment for Rent earned is explained as follows:
Account Titles | Debit | Credit |
Unearned Rent Revenue | $ 8,600 | |
Rent Revenue | $ 8,600 | |
(Being adjustment made for accrued Rent revenue) (25800/3) |
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Chapter 7 Solutions
Accounting: What the Numbers Mean
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