Freedom Air collected $165,000 in February for charter flights booked for March and April and properly recorded the amount collected as Unearned Charter Revenue. The flights provided during March earned revenue of $83,400. The correct entry to record the revenue earned in March is:
A)Debit Cash $83,400; credit Flight Revenue $83,400.
B)Debit Unearned Charter Revenue $83,400; credit Flight Revenue $83,400.
C)Debit Unearned Charter Revenue $165,000; credit Flight Revenue $165,000.
D)Debit Flight Revenue $81,600; credit Accounts Receivable 81,600.
E)Debit Unearned Charter Revenue $83,400; credit Accounts Receivable $83,400.

Question

Quizplus · Accepted Answer

The $165,000 collected in February had been recorded as Unearned Charter Revenue, which means that it was not yet earned. As the flights were carried out in March, a portion of the revenue would have been earned. 
Therefore, the correct entry to record the revenue earned in March would be to debit the Unearned Charter Revenue account for the amount of revenue earned ($83,400) and credit the Flight Revenue account for the same amount. This entry reduces the unearned balance recorded in February and recognizes the revenue earned in March.

Freedom Air Collected $165,000 in February for Charter Flights Booked