Pattie's Event Planning Service collects the fees from its customers in advance. At January 1, 2019, the balance of the unearned revenue account was a credit of $4,000. During January and February, the company collected $2,000 and $1,000 respectively. During the two-month period, the company rendered services of $5,500. At the end of February, the unadjusted trial balance will show what balance in unearned revenues?

Question

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The unearned revenue at the start was $4,000 (credit). After collecting $2,000 and $1,000, the total unearned revenue became $7,000 (credit). After rendering services worth $5,500, the unearned revenue would decrease to $1,500 (credit), as these services are now earned.

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