Question

Metro Event Planning Services collects fees from its customers in advance. On January​ 1, 2019, the balance of its Unearned Revenue account was $ 6,000 ​(CR). During January and​ February, the company collected $ 2,000 and $600 as advance fees. During the twominusmonth ​period, it performed services of $ 5,500 related to the deferred revenue. What is the balance in Unearned Revenue at the end of​ February?
a. debit balance of $3000

b. debit balance of $200

c. credit balance of $200

d. credit balance of $3000

Answer 1

Answer:

d. credit balance of $3000

Explanation:

Unearned Revenue is a liability and hence a Credit Balance Account. Unearned Revenue occurs when a firm receives cash for services not yet performed. As the service is performed, the account will be reduced to the extent of those services performed as shown below :

Unearned Revenue Account

Beginning Balance                                                                 $6,000 ​

Add Collected in advance during the year (2,000 + 600)   $2,600

Less Services Performed                                                      ($5,000)

Ending Balance                                                                       $3,100

Conclusion :

This is closest to d. credit balance of $3000