Accounting homework help?

Question

if previous month (Jan) Trial balance reads
Unearned revenue 200 (CR)

and on Feb you performed the service for 150 that was previously recorded as unearned revenue....

how do you record this in Feb journal entry?

shoul it be:

cash in bank 150
unearned revenue 150?

or is it:

revenue 150
unearned revenue 150

and why??

Answer 1

If you performed services worth 150 in February, your entry:
Dr Unearned revenue 150 (liability a/c)
Cr Revenue 150 (income a/c)

In so doing, your unearned rev balance would have fallen to $50, which is logical cos you 1st collected $200 without performing any service, and now you've performed service worth $150, so you only owe the customer $50 more in services. You credit $150 to revenue now and not before cos you've only just earned it. When you next perform more services worth $50, you'd:
Dr Unearned revenue 50
Cr Revenue 50

and you'd have a 0 balance for unearned rev. cos you've earned everything by then. You don't owe the customer anymore services.