The receipt increases the liability. The refund reduces both Cash and that liability. No revenue is recorded because the company has performed no service.
This treats the retained cash as earned even though the company has not performed any service.
This omits the $500 refund from both Cash and the customer obligation.
This reverses the normal sides of the asset and liability accounts.
Answer: A
The receipt debits Cash and credits Unearned Revenue for $6,000. The $500 refund debits Unearned Revenue and credits Cash. Ending Cash is a $5,500 debit balance, Unearned Revenue is a $5,500 credit balance, and Service Revenue remains zero.