In January, Denton Mabrey College received $120,000 in Unearned Tuition Revenue from its students for the spring semester, which lasts four months. On January 31, the college should recognize which amount for tuition revenue?
A) $30,000
B) $60,000
C) $80,000
D) $90,000
E) $120,000

Question

Quizplus · Accepted Answer

Unearned tuition revenue is recognized as earned over the duration of the academic term. In this case, the spring semester lasts four months, meaning that 1/4th of the unearned tuition revenue should be recognized as earned for each month. Therefore, on January 31 (the end of the first month of the semester), Denton Mabrey College should recognize 1/4th (or $30,000) of the unearned tuition revenue as earned tuition revenue.

In January, Denton Mabrey College Received $120,000 in Unearned Tuition