Question

Stockton Co. received advance payments from customers during 2016 of $6,000. At December 31, 2016, $1,300 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2016, what will the balances be in the Unearned Book Revenue and Book Revenue accounts?

Unearned Book Revenue ... Book Revenue
a. ​None of these choices
b. $6,000 ... $1,300
c. $1,300 ... $6,000
d.​ $1,300 ... $4,700

Answer 1

The balances in the Unearned Book Revenue and Book Revenue accounts will be $1,300 and $4,700, respectively.

Step-by-step explanation:

The balances in the Unearned Book Revenue and Book Revenue accounts after the adjustments are recorded and posted at December 31, 2016 will be:

1. Unearned Book Revenue: $1,300
2. Book Revenue: $4,700

The Unearned Book Revenue account represents the amount of revenue received in advance from customers for goods or services that have not yet been provided. The $1,300 represents the portion of the advance payments that has not been earned by December 31, 2016. The remaining $4,700 represents the revenue that has been earned and can now be recognized as income.