Question

Sutton co. sells cleaning service contracts for cash. the service contracts are for a one-year, two-year, or three-year period. cash receipts from contracts are credited to unearned service revenue. on december 31st, 2018, this account had a balance of $3,800,000 before year-end adjustment. service contract costs are charged as incurred to the service contract expense account, which had a balance of $900,000 on december 31st, 2018. service contracts still outstanding on december 31st, 2018, expire as follows: on the december 31st, 2018 balance sheet, the unearned service revenue will be reported as

a.$2,800,000.
b.$1,900,000.
c.$2,900,000.
d.$1,000,000.

Answer 1

On the December 31st, 2018 balance sheet, the Unearned Service Revenue will be reported as a. $2,800,000.

The Unearned Service Revenue is a liability account that describes that advance amounts that were received for services or good provided. In the event that the services or goods are provided, the Unearned Service Revenue is decreased while the revenue account increases.