Metro Event Planning Services collects fees from its customers in advance. On January 1, 2019, the balance of its Unearned Revenue account was $ 3 comma 000 (CR). During January and February, the company collected $ 4 comma 000 and $ 700 as advance fees. During the twominus month period, it performed services of $ 4 comma 500 related to the deferred revenue. What is the balance in Unearned Revenue at the end of February? A. debit balance of $ 3 comma 000

Question

Kaylie Chambers

Business

18 May, 13:52

Metro Event Planning Services collects fees from its customers in advance. On January 1, 2019, the balance of its Unearned Revenue account was $ 3 comma 000 (CR). During January and February, the company collected $ 4 comma 000 and $ 700 as advance fees. During the twominus month period, it performed services of $ 4 comma 500 related to the deferred revenue. What is the balance in Unearned Revenue at the end of February? A. debit balance of $ 3 comma 000

+3

Answers (1)

Know the Answer?

Whitaker · Answer 1

A credit balance of $3 comma 200

Explanation:

When a fee is received in advance for a service yet to be rendered, the revenue for such fee is said to be unearned. The entries required are;

Debit Cash account

Credit Unearned fees or deferred revenue.

As the service is performed and the revenue is earned,

Debit Unearned fees

Credit Revenue.

Total amount collected in advance as at end of February

= $3,000 + $4,000 + $700

= $7,700 (Cr in Unearned revenue)

Amount of revenue earned as at end of February

= $4,500 (Dr in Unearned revenue)

Balance in in Unearned Revenue at the end of February

=$7,700 - $4,500

= $3,200