Question

Celebraty Printings sold annual subscriptions to their magazine for $33,000 in December, 2019. The magazine is published monthly. The new subscribers received their first magazine in January, 2020.

Answer 1

1. Unearned subscription revenue A/c Dr

To Subscription revenue

(Being the unearned amount is recorded)

2. $30,250

Step-by-step explanation:

1. The adjusting entry is shown below:

Unearned subscription revenue A/c Dr

To Subscription revenue

(Being the unearned amount is recorded)

The computation is shown below:

= Annual subscription sold × number of months ÷ total number of months in a year

= $33,000 × 1 month ÷ 12 month

= $2,750

The one month is calculated from December 2019 to January 2020

2. The computation of the unearned revenue is shown below:

= Annual subscription sold - one month amount

= $33,000 - $2,750

= $30,250