Guyer Company publishes a monthly sports magazine, Fishing Preview. Subscription

Question

Guyer Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2012, Guyer sells 12,000 subscriptions beginning with the December issue. Guyer prepares financial statements quarterly and recognizes subscription revenue earned at the end of the quarter. The company uses the accounts Unearned Subscriptions and Subscription Revenue.



Prepare the entry in November for the receipt of the subscriptions.
Date Description Debit Credit
Nov. 30




Prepare the adjusting entry at December 31, 2012, to record subscription revenue earned in December 2012.
Date Description Debit Credit
Dec. 31




Prepare the adjusting entry at March 31, 2013, to record subscription revenue earned in the first quarter of 2013.
Date Description Debit Credit
Mar. 31

Explanation / Answer

Nov. 30 Dr. Cash $240,000 Cr. Unearned Subscriptions $240,000 Paid in advance Dec. 31 Dr. Unearned Subscriptions $20,000 Cr. Subscription Revenue $20,000 $240,000 * 1/12 March 31 Dr. Unearned Subscriptions $60,000 Cr. Subscription Revenue $ 60,000 $240,000 * 3/12

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