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Hi
I was doing an online accounting quiz and i came across to a question of unearned income whose answer i could not understand. Here is the question and its answer.
Elite Property Management adjusts its books each month but closes its books at the end of the year. The trial balance at January 31 before adjustments is as follows
Trial Balance
Unearned Management fees 3900
Management Fees Earned 17500$2,400 of the Unearned Management Fees has been earned in February. The amount of Management Fees Earned (revenue) to be reported in the January income statement is:
A)2400
B)15100
C)19900
D)19000The correct answer is C 19900. whereas i answered option D 19000.
Can you please explain this problem?
Are you sure you have typed the dates properly?
If you have, then the answer is 17500!! If the 3900 is unearned then it isn’t earned in January (it make any difference whether some of it is earned in February or in March or whenever).
I think that the question should say “2400 of the unearned management fees have been earned in January”. Then it would make sense and the answer would be 19900.
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