Sunland Company Ltd. publishes a monthly sports magazine, Fishing Preview. Subsc

Question

Sunland Company Ltd. publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $15 per year. During November 2017, Sunland sells 12,320 subscriptions for cash, beginning with the December issue. Sunland prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue. The company has a December 31 year-end. Prepare the entry in November for the receipt of the subscriptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Nov. Prepare the adjusting entry at December 31, 2017, to record subscription revenue in December 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Dec. 31 Prepare the adjusting entry at March 31, 2018, to record subscription revenue in the first quarter of 2018. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Mar. 31

Explanation / Answer

Date Account Debit credit Nov Cash 184800 unearned subscription revenue 184800 [being subscription sold 12320*15] 31 Dec 2017 unearned subscription revenue 15400 subscription revenue 15400 [Being subscription revenue for month of december earned 184800/12] march 31 2018 unearned subscription revenue 46200 subscription revenue 46200 [Being subscription revenue earned for 1 jan -31 march 184800/12=15400*3months]

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