contestada

Moreno Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $23 per year. During November 2014, Moreno sells 25,800 subscriptions beginning with the December issue. Moreno prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue.
a.Prepare the entry in November for the receipt of the subscriptions
b.Prepare the adjusting entry at December 31, 2014, to record sales revenue recognized in December 2014.
c.Prepare the adjusting entry at March 31, 2015, to record sales revenue recognized in the first quarter of 2015.

Respuesta :

Answer:

Explanation:

The journal entries are shown below:

a. Cash A/c Dr $593,400      (25,800 subscriptions × $23)

         To Unearned subscription revenue A/c $593,400

(Being unearned  subscription revenue recorded)

b. Unearned subscription revenue A/c Dr $49,450  ($593,400 ÷ 12)

         To Subscription revenue A/c     $49,450

(Being revenue is recognized for December month)

c. Unearned subscription revenue A/c Dr $148,350  ($593,400 × 3 ÷ 12)

         To Subscription revenue A/c   $148,350

(Being revenue is recognized for March month)

The 3 months is calculated from December 31 to March 31