Accounting...?

Question

If the unearned service revenue account had an unadjusted normal balance of $3,800, and an adjustment was made debiting the account for $500, the account would appear on the adjusted trial balance of the work sheet as a:
Question 12 answers
$4,300 debit
$4,300 credit
$3,300 debit
$3,300 credit

Answer 1

You probably received cash in advance for a service which you've yet to provide. At the time when you received the cash, you'd have:
Dr Cash 3,800 (an asset item)
Cr Unearned service revenue 3,800 (a liab item)

You owe the customer $3,800 worth of services, that's why unearned service revenue is a liability.

Depending on how the service is to be measured (e.g. by hours), it has been determined that you've performed services worth $500. So now you have to recognise that you've earned $500 and you owe the customer $3,300 worth of services. The adjusting entry would be:
Dr Unearned service revenue 500
Cr Service revenue 500 (a revenue item)

This will leave your unearned service revenue a/c with a credit balance of $3,300. You will keep making the above adjusting entry as and when the service is provided until the service is completed. At that time, your unearned service revenue a/c should have a zero balance - you don't owe the customer anything, you've done what you were paid to do.

Answer 2

$3,300 credit. Your initial revenue would have shown up on the trial balance as (3,800). After the $500 debit, the adjusted ending balance would be (3,300).

Answer 3

3300 credit. An unearned revenue account would be a liability (like billings in excess of costs). Debiting the account would mean you earned some of it and you can move it out of a liability and into a real revenue account.