On October 1, Goodwell Company rented warehouse space to a tenant for \( \$ 2,400 \) per month and received \( \$ 12,000 \) for five months' rent advance on that date, with the lease beginning immediately. The cash receipt was credited to the Unearned Revenue account. The company's annual accounting period ends on December 31 . The Unearned Revenue account balance at the end of December, after adjustment, should be:

At the start, Goodwell Company received \( \$ 12,000 \) for five months' advance rent, which means they have an obligation to provide space for the entire duration of the lease. By December 31, three months of the lease (October, November, December) would have been fulfilled, leading to revenue recognized of \( \$ 7,200 \) (3 months x \( \$ 2,400 \)). Hence, the remaining unearned revenue for the last two months (January and February) would be \( \$ 4,800 \) (2 months x \( \$ 2,400 \)). So, the Unearned Revenue account balance at the end of December should be \( \$ 4,800 \). Remember, the key to correctly adjusting unearned revenue is keeping track of how much has been earned and how much is still owed to your tenants!