Barker, Inc received subscription payments for annual subscription to its magazi

Question

Barker, Inc received subscription payments for annual subscription to its magazine. Payments rae recorded as revenue when received. Amounts received but unearned at the end of each of the last three years are as follows: unearned revenues 2003 $120,000, 2004 $150,000, 2005 $176,000 company failed to record the unearned revenues in each of the three years, as a result of this ommission 2005 income was a. overstated by $146,000 b. understated by $146,000 c. understated by $26,000 d. overstated by $26,000

Explanation / Answer

Solution:

a. overstated by $146,000

b. understated by $146,000

c. understated by $26,000

d. overstated by $26,000

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