Question

Northern Magazine collects cash from subscribers in advance and then mails the magazines to subscribers over a​ one-year period.

a. Record the journal entry to record the original receipt of $150,000 cash.
b. Record the adjusting entry that southern magazine makes to record earning $ 9,000 in subscription revenue that was collected in advance.

Answer 1

The Journal entries are as follows:

(a) Cash A/c Dr. $150,000

To subscriber A/c $150,000

(To record the original receipt of $150,000 cash)

(b) Subscriber A/c Dr. $9,000

To Revenue from magazine A/c $9,000

(To record the earning $ 9,000 in subscription revenue that was collected in advance)