The Houston Robots basketball team receives $5,000 for season tickets on August 1. By December 31, they have earned $2,000 of the revenue. The adjusting entry to be made on December 31 by the Houston Robots includes a:

Question

Quizplus · Accepted Answer

The adjusting entry to be made on December 31 by the Houston Robots includes a debit to Unearned Revenue of $2,000. This is because when the team receives $5,000 for season tickets, it is initially recorded as unearned revenue since the game has not yet been played. By December 31, the team has earned $2,000 of the revenue, so the remaining $3,000 is still unearned and should be adjusted accordingly. A debit to Unearned Revenue reduces the liability, while crediting Service Revenue increases revenue. Therefore, the correct choice is B.

The Houston Robots Basketball Team Receives $5,000 for Season Tickets