Mercury Company Sells Tickets in Advance for Its Weekly Productions

question 159

Multiple Choice

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

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Definitions:

Antedated Check

A check written with a date earlier than the date on which it was actually written.

Holder in Due Course

A legal term for a person who has acquired a negotiable instrument in good faith and for value, and thus has certain rights above the original payee.

Instrument Overdue

Refers to a financial instrument, like a check or promissory note, that has not been paid or honored by its due date.

Personal Defenses

Legal defenses used in contract law that relate to the specific circumstances or relationships between the parties involved, affecting the enforceability of the contract.