Patricia Event Planning Service collects fees from their customers in advance. On January 1, 2015, the balance of her Unearned Revenue account had a balance of $6,000 (Cr.). During January and February, she collected $3,000 and $1,000 as advance fees. During the two-month period, she rendered services of $6,500. What is the balance in Unearned Revenue at the end of February?
A)Debit balance of $6,000
B)Credit balance of $6,000
C)Debit balance of $3,500
D)Credit balance of $3,500

Question

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At the beginning of the period, the Unearned Revenue account had a credit balance of $6,000. In January, Patricia collected $3,000 as advance fees, increasing the balance to $9,000 (Cr.). In February, she collected $1,000, bringing the balance to $10,000 (Cr.). However, during the two-month period, she rendered services of $6,500, which reduces the balance of Unearned Revenue. Therefore, the ending balance of Unearned Revenue at the end of February is $3,500 (Cr.).

Patricia Event Planning Service Collects Fees from Their Customers in Advance