Question

Universal Publishing completed the following transactions during 2018​:

Oct. 1 Sold a six-month subscription (starting on November 1), collecting cash of
$270, plus sales tax of 8%.
Nov. 15 Remitted (paid) the sales tax to the state of Tennessee.
Dec. 31 Made the necessary adjustment at year-end to record the amount of
subscription revenue earned during the year.
Journalize the transactions (explanations are not required).

Answer 1

Oct. 1

Dr Cash 291.6

Cr Unearned Revenue 270.00

Cr Sales Tax Payable 21.6

Nov. 15

Dr Sales Tax Payable 21.6

Cr Cash 21.6

Dec.31

Dr Unearned Revenue 90.00

Cr Subscription Revenue90.00

Step-by-step explanation:

Journal entry for Universal Publishing

Since on Oct. 1 the company Sold a six-month subscription which start on November 1 in which the company collect cash of $270, in addition with sales tax of 8%. This means the transaction will be recorded as:

Oct. 1

Dr Cash 291.6

(270+21.6)

Cr Unearned Revenue 270.00

Cr Sales Tax Payable 21.6

(8%×270)

Since on Nov. 15 the company paid the sales tax to the state of Tennessee which is $270, in addition with a sales tax of 8% this means the transaction will be recorded as:

Nov. 15

Dr Sales Tax Payable 21.6

Cr Cash 21.6

Since we were told that the company made the necessary adjustment at year-end to record the amount of subscription revenue earned during the year which 270 this means the transaction will be recorded as:

Dec.31

Dr Unearned Revenue 90.00

(270÷ 3months)

Cr Subscription Revenue90.00