On January 1,2013,Charlie Keller paid $2,000 for a two-year membership to the High Beam Gym.High Beam records adjusting entries annually when the company prepares its financial statements.How would the company record the adjusting entry relating to transaction on December 31,2013?
A)Debit Cash for $2,000 and credit Unearned Membership Revenue for $2,000.
B)Debit Unearned Membership Revenue for $2,000 and credit Membership Revenue for $2,000.
C)Debit Unearned Membership Revenue for $1,000 and credit Membership Revenue for $1,000.
D)Debit Cash for $1,000 and credit Unearned Membership Revenue for $1,000.
E)Debit Membership Revenue for $2,000 and credit Unearned Membership Revenue for $2,000.

Question

Quizplus · Accepted Answer

The company should recognize one year of the membership revenue, which is $1,000, as earned by debiting Unearned Membership Revenue and crediting Membership Revenue.

On January 1,2013,Charlie Keller Paid $2,000 for a Two-Year Membership