Barker, Inc

Multiple Choice

Barker, Inc. receives subscription payments for annual (one year) subscriptions to its magazine. Payments are recorded as revenue when received. Amounts received but unearned at the end of each of the last three years are shown below:

Barker failed to record the unearned revenues in each of the three years. As a result of the omission, 2011 income was

A) overstated by $146,000.
B) understated by $146,000.
C) understated by $26,000.
D) overstated by $26,000.