Question

The Wazoo Times Newspaper Company showed an $11,200 liability in its 2011 balance sheet for subscription revenue received in advance. During 2012, $62,000 was received from customers for subscriptions and the 2012 income statement reported subscription revenue of $63,700. What is the liability amount for unearned subscription revenue that will appear in the 2012 balance sheet?

Answer 1

The liability for unearned subscription revenue on the Wazoo Times Newspaper Company's 2012 balance sheet will be $9,500, calculated by adding the initial liability and new subscriptions received and then subtracting the recognized subscription revenue for the year.

Step-by-step explanation:

The question pertains to accounting and the calculation of the liability for unearned subscription revenue. We start with the initial liability of $11,200 for subscriptions received in advance. During 2012, $62,000 was received for new subscriptions. However, the subscription revenue reported was $63,700, meaning this amount of revenue has been recognized. To find the liability for unearned subscription revenue at the end of 2012, we perform the following calculation:

1. Start with the initial unearned revenue balance of $11,200.
2. Add the new subscriptions received during the year, which is $62,000.
3. Subtract the revenue that has been recognized during the year, which is $63,700.

The calculation for the unearned revenue at the end of 2012 would be:

$11,200 + $62,000 - $63,700 = $9,500

Therefore, the liability for unearned subscription revenue on the 2012 balance sheet will be $9,500.