Moreno Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2019, Moreno sells 15,000 subscriptions beginning with the December issue. Moreno 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 subscriptions

(b) Prepare the adjusting entry at December 31, 2019, to record sales revenue recognized in December 2019.

Question

Athena Hill

Business

8 October, 11:17

Moreno Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2019, Moreno sells 15,000 subscriptions beginning with the December issue. Moreno 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 subscriptions

(b) Prepare the adjusting entry at December 31, 2019, to record sales revenue recognized in December 2019.

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Answers (1)

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Skyla Rose · Answer 1

The journal entries are shown below:

a. Cash A/c Dr $300,000 (15,000 * $20)

To Unearned Service revenue A/c $300,000

(Being unearned service revenue recorded)

b. Unearned Service revenue A/c Dr $25,000 (300,000 : 12 month)

To Service revenue A/c $25,000

(Being the adjusting entry for December month is recorded)