Mercury Company sells tickets in advance for its weekly productions and records the proceeds as Unearned Revenue.At the end of each month,the company makes an adjusting entry to account for the tickets used during the month (ticket revenue.)On March 1,the Unearned Revenue account had a credit balance of $5,000.During March,Mercury sold 500 tickets at $40 each,and 450 tickets were used during the month.What is the balance in Unearned Revenue at the end of March?
A) credit balance of $7,000
B) debit balance of $5,000
C) credit balance of $5,000
D) debit balance of $7,000

Question

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The balance in Unearned Revenue at the end of March is a credit balance of $7,000. This is calculated by adding the revenue from tickets sold in March ($20,000 from 500 tickets at $40 each) to the initial credit balance ($5,000), then subtracting the revenue recognized from tickets used during the month ($18,000 from 450 tickets at $40 each), resulting in a new credit balance of $7,000.

Mercury Company Sells Tickets in Advance for Its Weekly Productions