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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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  1. 25 November, 12:45
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    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
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