Fragmental Co

question 56

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.The journal entry made by Fragmental Co.at year-end 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 Cash and a credit to Rent Revenue for $6,400.
• D)A debit to Unearned Rent and a credit to Rent Earned for $2,400.
• E)A debit to Unearned Rent and a credit to Rent Earned for $4,000.

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Definitions:

Tax Rate

Tax rate refers to the percentage at which an individual or corporation is taxed by the government on their income or profits.

Income Tax Payable

The amount of income tax a company or individual owes to the government but has not yet paid at a specific date, found on the balance sheet.

Pre-Tax Book Income

Earnings of a business before taxes are deducted, as reported in its financial books.

Tax Depreciation

The allocation of an asset's cost over its useful life for the purposes of tax deductions, according to IRS rules and schedules.