Question 5 3 pts Morbes Magazine is a magazine publisher who began their operati

Question

Question 5 3 pts Morbes Magazine is a magazine publisher who began their operations on April 1, 2018. On this date, Morbes sold 40, 000 one-year subscriptions, with each subscriber paying $36. Subscribers are required to pre-pay for their subscriptions, thus Morbes receive d the cash from the 40,000 subscriptions on April 1, 2018. Due to risin g costs, Morbes changed their subscription fee to $39 per year begin ning April 1, 2019, and 29,000 customers choose to renew their subsc riptions, again paying the full amount to Morbes on April 1, 2019. Due to a feature article about billionaire tycoon Betty DeRose in the August, 2019 issue, 5,500 new subscribers signed up for yearly subscri ptions beginning in September, 2019, at a rate of $39 per year. All 5,500 subscribers paid the full amount due to Morbes on Septen ber 1, 2019 Calculate the amount of unearned revenue shown at December 31, 2019 in Morbes' balance sheet

Explanation / Answer

Amount of unearned revenue relating to 1 April 2019 = (29000 x 39)/12 x 3 = 282750

Amount of unearned revenue relating to 1 Sept 2019 = (5500 x 39)/12 x 8 = 143000

Amount of unearned revenue at 31 dec 2019 = 282750 + 143000 = 425750

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