[grannygabby]

July 31: The balance of the unearned revenue account relates to the contract between PS Music and WHBD, described in the July 3, 2012 transaction, which included the following: "On behalf of PS Music, Pat signed a contract with a local radio station, WHBD, to provide guest spots for the next three months. The contract requires PS Music to provide a guest disc jockey for 80 hours per month for a monthly fee of $3,600." In accordance with the contract, Pat received $7,200 from WHBD as an advance payment for the first two months. How do I find the unearned revenue

[pready]

This is a simple problem. Your beginning Unearned Revenue account balance is $7,200 because this is the amount that was received in advance for advertising on Jul 1.

On Jul 31 which means that you have to calculate one month of advertising. The amount was given to you so the amount of adverstising for the month is $3,600

So to calculate the amount that is still unearned at Jul 31 simply subtract $3,600 from your beginning account balance of $7,200

Another way to figure this out is that the company was paid $7,200 for 2 months in advance and the company provided one month of adverstising service so you still have one month remaining for adversting. So $7,200 divided by 2 equals $3,600 a month times one month equals $3,600 of advertising service rendered. Now $7,200 minus $3,600 equals $3,600 or one month of unearned revnue.