Answer:
$7,500
Explanation:
Since the company started the year with $10,000 of unearned revenue on October 1, we can assume that the contract started on that date.
To find the unearned revenue as of December 31, we need to determine the number of months that have passed since October 1.
From October 1 to December 31, a total of 3 months have passed.
We can calculate the portion of the contract that has been earned by dividing the number of months that have passed (3) by the total number of months in the contract (12).
Therefore, the portion of the contract that has been earned is 3/12 or 1/4
To find the unearned revenue, we subtract the portion that has been earned (1/4) from the initial unearned revenue of $10,000.
[tex]10,000 - (10,000 * 1/4) = $7,500[/tex]
So, the unearned revenue as of December 31 is $7,500
