Golf World Publications publishes a golf magazine for women. The magazine sells

Question

Golf World Publications publishes a golf magazine for women. The magazine sells for $3 a copy on the newsstand. Yearly subscriptions the magazine cost $24 per year (12 issues). During December 2008, Golf World Publications sells 9,000 copies of the golf magazine at newsstands and receives payment for 15,000 subscriptions for 2009. Financial statements are prepared monthly.
INSTRUCTION
Prepare the necessary adjusting entry on January 31, 2009. The January 2009 issue has been mailed to subscribers.

Explanation / Answer

31 Dec 2008 Cash Dr 387,000 News Stand Sales Cr 27,000 Adv Subscription A/C Cr 360,000 (To record Subcription for 15000x$24=360,000 & Newsstand sale 9000*$3=27000) So In Dec 2008 Financial Stt, the Adv Subscription A/C will appear as a Liability on the Balance sheet.

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