On January 1,the Thunderball Hockey Association sold 300 season passes for $200 each.The season lasts from February through May.If the amount received was credited to unearned revenue,what adjusting entry will be made on February 28?

Question

Quizplus · Accepted Answer

The adjusting entry to be made on February 28th will be to recognize the revenue earned for the month of February, which is 1/4th of the season. Since the total season passes sold were 300, the revenue earned for February will be:

Revenue earned = (300 passes * $200 each) * 1/4 = $15,000

Since the amount was credited to unearned revenue initially, the adjusting entry will be to debit the unearned revenue account for $15,000 and credit the revenue account for $15,000.

Option A is incorrect because it suggests crediting the unearned revenue account instead of debiting it.
Option B is incorrect because it suggests recognizing only half of the revenue earned in February.
Option D is incorrect because it suggests recognizing the entire revenue of $60,000 instead of the portion earned in February.

On January 1,the Thunderball Hockey Association Sold 300 Season Passes