Pattie's Event Planning Service collects the fees from their customers in advance. At 1 January 2014, the balance of her Unearned revenue account was a credit of $4 000. During January and February, she collected $2 000 and $1 000 respectively. During the two- month period, she rendered services of $5 500. At the end of February, her adjusted trial balance will show what balance in Unearned revenues?
A)Credit balance of $3 000
B)Debit balance of $2 300
C)Debit balance of $3 000
D)Credit balance of $1 500

Question

Quizplus · Accepted Answer

The initial unearned revenue was $4,000. She collected an additional $3,000 ($2,000 in January and $1,000 in February), making the total unearned revenue $7,000. She rendered services worth $5,500, which reduces the unearned revenue. Therefore, the balance in Unearned Revenues is $7,000 - $5,500 = $1,500 credit.

Pattie's Event Planning Service Collects the Fees from Their Customers