On December 1, Aggie Magazine Publishing Company (AMPCO) received $1,200 in adva
ID: 2420870 • Letter: O
Question
On December 1, Aggie Magazine Publishing Company (AMPCO) received $1,200 in advance from customers for 6-month subscriptions, with the first issue to be mailed December 15. AMPCO increased Unearned Revenue at the time the cash was received. Assuming the magazines were sent as promised, what adjusting entry should AMPCO record on December 31?
increase Cash and decrease Accounts Receivable for $1,000
decrease Accounts Receivable and increase Revenue for $200
increase Revenue and decrease Unearned Revenue for $200
increase Cash and increase Revenue for $1,200
none of the above
a.increase Cash and decrease Accounts Receivable for $1,000
b.decrease Accounts Receivable and increase Revenue for $200
c.increase Revenue and decrease Unearned Revenue for $200
d.increase Cash and increase Revenue for $1,200
e.none of the above
Explanation / Answer
ANSWER = C) increase Revenue and decrease Unearned Revenue for $200
6 MONTHS subscription advance received = $ 1200
december month = $1200 / 6 = $200
revenue for month of december = $ 200
and unearned revenue decrease due revenue earned during the month of december = $ 200
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