Stockton Co.received advance payments from customers during 2017 of $6,000.At December 31,2016,$1,300 of the advance payments still had not been earned.After the adjustments are recorded and posted at December 31,2016,what will the balances be in the Unearned Book Revenue and Book Revenue accounts? $\begin{array}{llcc}
\text { Unearned Book Revenue } & \text {Book Revenue } \
\end{array}$

a.
$\begin{array}{cc}
&&&\$1,300&&&&&&&&\$6,000
\end{array}$

b.
$\begin{array}{cc}
&&&\$1,300&&&&&&&&\$4,700
\end{array}$

c.
$\begin{array}{cc}
&&&\$6,000&&&&&&&&\$1,300
\end{array}$

d.
None of these choices

Question

Stockton Co.received advance payments from customers during 2017 of $6,000.At December 31,2016,$1,300 of the advance payments still had not been earned.After the adjustments are recorded and posted at December 31,2016,what will the balances be in the Unearned Book Revenue and Book Revenue accounts? $\begin{array}{llcc}
  \text { Unearned Book Revenue } &  \text {Book Revenue  } \
\end{array}$

a.
$\begin{array}{cc}
&&&\$1,300&&&&&&&&\$6,000
\end{array}$

b.
$\begin{array}{cc}
&&&\$1,300&&&&&&&&\$4,700
\end{array}$

c.
$\begin{array}{cc}
&&&\$6,000&&&&&&&&\$1,300
\end{array}$

d.
 None of these choices

Quizplus · Accepted Answer

The $1,300 of advance payments that still had not been earned at December 31, 2016, must be deferred to the Unearned Book Revenue account. Therefore, the balance in the Unearned Book Revenue account will be $1,300.

To determine the balance in the Book Revenue account, we need to subtract the portion of the advance payments that have been earned as of December 31, 2016. If no other information is given, we cannot determine this amount. Therefore, the best choice is B, which shows the balance in the Unearned Book Revenue account but does not specify the balance in the Book Revenue account.

Stockton Co Unearned Book Revenue Book Revenue \begin{array}{llcc} \text { Unearned Book Revenue } & \text {Book Revenue } \\\end{array} Unearned Book Revenue ​Book Revenue ​

Stockton Co $\begin{array}{llcc} \text { Unearned Book Revenue } & \text {Book Revenue } \\\end{array}$