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15 January, 19:17

The Unearned Revenue account of Rory Incorporated began 2018 with a normal balance of $ 4 comma 000 and ended 2018 with a normal balance of $ 10 comma 000. During 2018 , the Unearned Revenue account was credited for $ 25 comma 000 that Rory will earn later. Based on these facts, how much revenue did Rory earn in 2018 ? A. $ 31 comma 000 B. $ 25 comma 000 C. $ 19 comma 000 D. $0

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  1. 15 January, 19:22
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    C. $ 19.000

    Explanation:

    The unearned revenue account is a liability account for collections received for which services have not been performed.

    The Revenue earned is as follows:

    Opening balance (Unearned Revenue) + Additions to Unearned Revenue - Closing Balance (Unearned Revenue)

    $ 4,000 + $ 25,000 - $ 10,000 = $ 19,000

    so the revenue earned is $ 19,000

    This can also be explained by the amounts credited to Unearned Revenue account adjusted for changes in Unearned Revenue balance for the year.

    $ 25,000 - $ 6,000 (Increase in Unearned Revenue balance over the period.)
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