At 1 January, Smith has a beginning balance in Unearned revenue of $1 000. During January, he earns $800 of that amount. He also collects $4 000 from a new customer for services to be rendered the following month. As of the end of January, the Unearned revenue account had a balance of $4 800.

Question

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The Unearned revenue account should have a balance of $4,200 at the end of January. Starting with $1,000, Smith earns $800, reducing it to $200. Adding $4,000 collected for future services results in a balance of $4,200.

At 1 January, Smith Has a Beginning Balance in Unearned