Final answer:
The Lone Gunmen earned subscription revenue for 2023 is calculated based on the proportion of the year that the annual subscriptions cover. Seven months of revenue are recognized for the subscriptions sold on June 1, 2023, leading to an approximation of $875,280, which matches closest to option c. $875,000.
Step-by-step explanation:
The question of how much earned subscription revenue The Lone Gunmen magazine generated in 2023 requires an understanding of revenue recognition. Although the magazine sold annual subscriptions, only the portion corresponding to 2023 should be recognized as revenue for that year, as per accrual accounting principles. If the subscriptions were sold on June 1, 2023, and are for a full year, only seven months of the subscriptions pertain to the year 2023 (from June to December), and the revenue realized from these months is considered earned for 2023.
Therefore, to calculate this, we divide the annual subscription fee by 12 to find the monthly fee, and then multiply that by 7 to get the revenue for the seven months of 2023:
- Monthly fee: $125 / 12 = $10.42 (rounded to 2 decimal places)
- 2023 Revenue per subscription: $10.42 × 7 = $72.94 (rounded to 2 decimal places)
- Total 2023 earned subscription revenue: $72.94 × 12,000 subscriptions = $875,280
By rounding the monthly revenue to two decimal places, we arrive at a slight approximation. The nearest option that matches our calculated approximation for the earned subscription revenue is c. $875,000.