Question

Jericho Road Co. typically sells annual subscriptions to their magazine which is published six times each year. The magazine sells 60,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions

Answer 1

Credit Entry to Sales / Unearned subscription revenue - $600,000

Debit Entry Cash / Bank - $600,000

Step-by-step explanation:

In cash sales transaction , the bank or cash account is debited for the value sales proceed while the sales account is credited for the same value.

In the situation of a credit sales , while the sis credited , the receivable account is debited for the value sales account .

WE also need to know that the inventory also need to be credited for the cost of good sold and and the cost of goods account debited for the same value,

Answer 2

Debit Cash account $600,000

Credit Unearned revenue from subscription $600,000

Step-by-step explanation:

When a fee is received in advance for a service yet to be rendered, the revenue for such fee is said to be unearned. The entries required are

Debit Cash account and Credit Unearned fees or deferred revenue.

As the service is performed and the revenue is earned, debit Unearned fees and credit revenue.

Total subscription received = $10 * 60,000

= $600,000

Amount earned in January (after one in six publications)

= 1/6 * $600,000

= $100,000