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16 August, 00:09

Vista newspapers sold 6,000 of annual subscriptions at $125 each on September 1.

How much unearned revenue will exist as of December 31?

a. $0.

b. $500,000.

c. $250,000.

d. $750,000.

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Answers (1)
  1. 16 August, 00:24
    0
    Option (B) is correct.

    Explanation:

    Annual Subscription:

    = 6000 * $125

    = $750,000

    Since, the payment was received for 1 Year, we will recognize 4 months revenue (1 September till 31st December) in the given year:

    = $750,000 * (4/12)

    = $250,000

    Unearned Revenue as on 31st December:

    = Total Payment Received - Revenue Recognized for 4 months

    = $750,000 - $250,000

    = $500,000
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