mantle publication publishes a golf magazine for women.the magazine sells for 4.

Question

mantle publication publishes a golf magazine for women.the magazine sells for 4.00 a copy on the newsstand.yearly subscriptions to the magazine cost 36 per hear. during December 2009 , expert publications sells 4,000 copies of the golf magazine at newsstands and receives payment for 5000 subscriptions for 2010.financial statements are prepared monthly.
a.prepare the December 2009 journal entries to record the newsstand sales and subscription received
b.prepare the necessary adjustment entry on January 31, 2010.the January 2010 issue has been mailed to subscribers

Explanation / Answer

a) Subcription for 5000x$36=$180,000

News stand sale 4000*$4=$16,000

31 Dec 2009 Cash Dr S196,000

News Stand Sales Cr $16,000
Adv Subscription A/C Cr $180,000


Since the sunscriptions are to be sent to the customers so they will come under the categoty of LIABILITIES.

b) Now since the issues for first month have been sent so the LIABILITIES portion will be decreased

Price per issue for subsciptions = 36/12 = $3

No of subscriptions = 5000

So the amount to be removed from LIABILITIES =5000*3 = $15,000

So LIABILITIES will be = $180,000-$15,000 = $165,000

And $15,000 will be classified as assets.

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.