In its 2013 income statement, WME reported $695,000 for service revenue earned from membership fees. WME received $681,000 cash in advance from members during 2013. In its reconciliation schedule, WME should:
A)Show a $14,000 negative adjustment to net income under the indirect method for the increase in unearned revenue.
B)Show a $14,000 negative adjustment to net income under the indirect method for the decrease in unearned revenue.
C)Show a $14,000 positive adjustment to net income under the indirect method for the increase in unearned revenue.
D)Show a $14,000 positive adjustment to net income under the indirect method for the decrease in unearned revenue.

Question

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The Answer of In its 2013 income statement, WME reported $695,000 for service revenue earned from membership fees. WME received $681,000 cash in advance from members during 2013. In its reconciliation schedule, WME should:
A)Show a $14,000 negative adjustment to net income under the indirect method for the increase in unearned revenue.
B)Show a $14,000 negative adjustment to net income under the indirect method for the decrease in unearned revenue.
C)Show a $14,000 positive adjustment to net income under the indirect method for the increase in unearned revenue.
D)Show a $14,000 positive adjustment to net income under the indirect method for the decrease in unearned revenue.

In Its 2013 Income Statement, WME Reported $695,000 for Service