Final answer:
To find the ending balance of Unearned Revenue for Mercury, Inc., we add the revenue from tickets sold during March to the initial balance, then subtract the revenue recognized from tickets used. The ending balance is a credit of $9,000, representing the value of the tickets sold that have not yet been used.
Step-by-step explanation:
The student has asked how to calculate the ending balance of the Unearned Revenue account for Mercury, Inc., a company that sells tickets in advance for its productions. As of March 1, the Unearned Revenue had a credit balance of $8,000 which is for 400 tickets sold at $20 each. During March, 600 additional tickets were sold at $20 each, and 550 tickets were used.
To determine the ending balance, we need to calculate the amount of revenue recognized from tickets used and adjust the Unearned Revenue accordingly. Here's a step-by-step explanation:
- Calculate the total revenue from additional tickets sold during March: 600 tickets × $20 = $12,000.
- Add this amount to the beginning Unearned Revenue balance to find the total Unearned Revenue before adjustments: $8,000 + $12,000 = $20,000.
- Calculate the revenue recognized from the tickets used: 550 tickets × $20 = $11,000.
- Deduct the recognized revenue from the total Unearned Revenue to find the ending balance: $20,000 - $11,000 = $9,000 credit balance.
Therefore, the correct answer is B. credit balance of $9,000