Metro Event Planning Services collects fees from its customers in advance.On January 1,2019,the balance of its Unearned Revenue account was $5,000 (CR).During January and February,the company collected $2,000 and $700 as advance fees,respectively.During the two-month period,it performed services of $4,500 related to the deferred revenue.What is the balance in Unearned Revenue at the end of February?
A) debit balance of $5,000
B) credit balance of $5,000
C) debit balance of $3,200
D) credit balance of $3,200

Question

Quizplus · Accepted Answer

At the beginning of January, the Unearned Revenue account had a credit balance of $5,000. In January and February, Metro collected $2,000 + $700 = $2,700 as advance fees. Now, the balance of the Unearned Revenue account is $5,000 (beginning balance) + $2,700 (fees collected) - $4,500 (revenue recognized) = $3,200 (credit balance). Therefore, the correct answer is option D - credit balance of $3,200.

Metro Event Planning Services Collects Fees from Its Customers in Advance.On