It is to be noted that the unearned revenue as of December 31 would be $3,000.
Unearned income is money received by a person or business in exchange for a good or service that has not yet been rendered or supplied.It can be viewed as a "prepayment" for products or services that the buyer expects to get from the seller at a later time.
To find the unearned revenue as of December 31, we need to look for the proportion of services that have not yet been rendered.
Because the contract beganon October 1 , there are three months' worth of services that have not yet been provided (October, November,and December).
Therefore, the unearned revenue as of December 31 would be
3/12 x $ 12,000
0.25 x $ 12,000
= $3,000.
Full Question:
Although part of your question is missing, you might be referring to this full question:
On October 1, a client pays a company the full $12,000 balance of a yearlong contract. Using the Accrual method, what's the unearned revenue as of December31?