If the rent received in advance ₹ 2,000. The adjustment entry will be:
Explanation
According to the provided context, when rent is received in advance, it represents a liability for the current year because the service (use of the building) will be provided in the next year. The text illustrates that the adjustment entry involves reducing the Rent account (by debiting it) to remove the income not pertaining to the current year and creating a liability account (by crediting Rent received in advance). The journal entry shown is 'Rent received A/c Dr. ... To Rent received in advance A/c ...'. Option (B) correctly identifies this: Debit rent account and Credit rent received in advance account.
Solution Steps
Step 1: Identify the nature of the transaction. Rent received in advance is an income received for the next year but recorded in the current year.
Step 2: Apply the adjustment logic from the text. The rent account needs to be reduced (Debited) and a liability for the advance needs to be created (Credited).
Step 3: Match with the options. The entry 'Debit rent account Credit rent received in advance account' corresponds to Option (B).