The Following Account Balances Are Taken from the December 31

Multiple Choice

The following account balances are taken from the December 31, 2015, financial statements of ABZ Advertising Company.The company uses accrual basis accounting.

The following activities occurred in 2016:
1.Performed advertising services on account, $55,000.
2.Received cash payments on account, $10,400.
3.Received deposits from customers for advertising services to be performed in 2017, $2,500.
4.Made payments to suppliers on account, $5,000.
5.Incurred $45,000 of operating expenses; $39,000 was paid in cash and $6,000 was on account and unpaid as of the end of the year.
-Use the information above to answer the following question.Which of the following is the journal entry that will be used to record activity #3?

A) Debit Cash and credit Unearned Revenue for $2,500
B) Debit Unearned Revenue and credit Advertising Revenue for $2,500
C) Debit Cash and credit Accounts Receivable for $2,500
D) Debit Unearned Revenue and credit Receivable for $2,500