The Houston Mavericks basketball team receives $6,500 for season tickets on August 1.By December 31,$3,900 of the revenue has been earned.The adjusting entry to be made on December 31 includes a:

Question

Quizplus · Accepted Answer

The adjusting entry on December 31 would be to debit Unearned Revenue for the amount of revenue earned between August 1 and December 31 ($3,900), reducing the liability. Therefore, the correct choice is B: debit to Unearned Revenue of $3,900. Option A is incorrect because it suggests that the credit should be made to Unearned Revenue, which is already overstated because $3,900 has been earned. Option C is incorrect because it suggests that the revenue account should be debited, which it should only be debited when the revenue is earned, not when it is unearned. Option D is incorrect because there is no such account as Prepaid Revenue.

The Houston Mavericks Basketball Team Receives $6,500 for Season Tickets