On March 31, 2009, Phoenix, Inc. paid Melanie Publishing Company $15,480 for a 3-year subscription for five different magazines. The subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Phoenix Company after adjustments on December 31 each year

Question

Macie Gillespie

Business

25 November, 12:22

On March 31, 2009, Phoenix, Inc. paid Melanie Publishing Company $15,480 for a 3-year subscription for five different magazines. The subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Phoenix Company after adjustments on December 31 each year

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Answers (1)

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Morrow · Answer 1

prepaid subscrption ending balance

2009 11,610

2010 6,460

2011 1,290

Explanation:

15,480 / 36 months = 430 per month

December 31th Adjustment:

430 x 9 months (from March 31,2009 to December 31,2009)

received magazinesfor $ 3,870

balance: 15,480 - 3,870 = 11,610

Decmeber 31th 2010

430 x 12 months = 5,160

balance 11,610 - 5,160 = 6,450

2011 adjustment

again for 12 months: 5,160

6,450 - 5,160 = 1,290