On December 31,2011,the Balance in Pinnacle Exploration Company's Unearned Revenue

question 33

Essay

On December 31,2011,the balance in Pinnacle Exploration Company's Unearned revenue account is credit of $4,200.In January,2012,the company received an advance payment of $12,000 from a new customer for services to be performed.By January 31,adjustments had been made to recognize $8,500 of the revenue which had been earned during January.What would be the balance in Unearned revenue on January 31,2012?
A) $16,200 credit
B) $8,500 debit
C) $3,500 credit
D) $7,700 credit

• A) $16,200 credit
• B) $8,500 debit
• C) $3,500 credit
• D) $7,700 credit

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Definitions:

Producer Surplus

The difference between the amount producers are willing to accept for a good or service versus what they actually receive.

P = MC

An economic principle stating that the optimal level of output occurs when the price (P) equals marginal cost (MC), guiding firms in perfect competition on production decisions.

Perfect Competition

A market structure characterized by a large number of small firms, homogenous products, free entry and exit, and perfect information, leading to firms being price takers.

Marginal Cost

The expense incurred from manufacturing an additional unit of a product.