Question

Concord Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2020, Concord sells 16,500 subscriptions beginning with the December issue. Concord prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue.a.Prepare the entry in November for the receipt of the subscriptionsb.Prepare the adjusting entry at December 31, 2014, to record sales revenue recognized in December 2014.c.Prepare the adjusting entry at March 31, 2015, to record sales revenue recognized in the first quarter of 2015.

Answer 1

Step-by-step explanation:

The journal entries are shown below:

a) Cash A/c Dr $330,000 (16,500 subscriptions × $20)

To Unearned subscription Revenue A/c $330,000

(Being the receipt of the subscriptions is recorded)

b) Unearned subscription Revenue A/c Dr $27,500

To Subscription Revenue A/c $27,500

(Being the sales revenue recognized in December 2014 is recorded)

The calculation is shown below:

= $330,000 × 1 month ÷ 12 month

= $27,500

c) Unearned subscription Revenue A/c Dr $82,500

To Subscription Revenue A/c $82,500

(Being the sales revenue recognized in March 31, 2015 is recorded)

The calculation is shown below:

= $330,000 × 3 month ÷ 12 month

= $82,500