Final answer:
The correct answer is b. $333,333.
The unearned revenue for Vista newspapers as of December 31, considering 4,000 annual subscriptions sold at $125 each on September 1, is $333,333, reflecting the value of services not yet provided for the remaining 8 months of the subscription period.
Step-by-step explanation:
The question concerns the calculation of unearned revenue for Vista newspapers' annual subscriptions sold. Unearned revenue is the amount of money received by a company for services or goods yet to be provided or delivered. Since the subscriptions are annual and were sold on September 1, we calculate the revenue that is unearned as of December 31. With a total sale of 4,000 subscriptions at $125 each, the total annual revenue is $500,000. Since only 4 months (September through December) of the service will have been provided by year's end, we need to calculate the value of the remaining 8 months (time-proportion calculation) which represent the unearned portion of the revenue.
To achieve this, we divide the total annual revenue by 12 months to find the monthly revenue and then multiply by 8 to find the unearned revenue for 8 months:
Total annual revenue: 4,000 subscriptions x $125/subscription = $500,000
Monthly revenue = $500,000 / 12 months = $41,666.67
Unearned revenue (for 8 months) = $41,666.67/month x 8 months = $333,333.34
Therefore, the correct answer is b. $333,333.