Easy Rentals Ltd received 4 months’ rent in advance from tenants on 1 April 2015. The entire amount of $6400 was credited to the Unearned Revenue account at this date. Ignore GST.

Required

A. Give the adjusting entry at 30 June 2015.

B. What amount (if any) should be reported in the statement of financial position at 30 June 2015?

C. If no adjusting entry were made on 30 June, by how much would profit be overstated or understated? Would liabilities be overstated or understated? Explain.

D. What would your adjusting entry be in requirement A if the amount of $6400 had been credit to Rental Revenue on 1 April 2015?