A local tennis club sells season memberships for $1,000 each. During January 2013, 50 season memberships were sold. As of March 31, 2013, only $25,000 of season membership fees had been collected from customers. The tennis season runs for 6 months starting April 01, 2013. Which one of the following is an amount reported on the Balance Sheet dated March 31, 2013?

Question

Quizplus · Accepted Answer

As of March 31, only $25,000 of the season membership fees had been collected, which means that the remaining $50,000 ($1,000 x 50 memberships) is unearned revenue. Therefore, the correct choice is A, unearned tennis membership revenue of $25,000. Accounts receivable would be incorrect because no services have been rendered yet, and tennis membership revenue would be incorrect because the season has not started yet.

A Local Tennis Club Sells Season Memberships for $1,000 Each