Question

n November and December 2017, Gee Company, a newly organized magazine publisher, received $36,000 for 1,000 three-year subscriptions at $12 per year, starting with the January 2018 issue of the magazine Required: How much should Gee report in its 2017 income statement for subscriptions revenue on an accrual basis? What are Gee's cash receipts in 2017? Revenue recognized Cash receipts

Answer 1

1) Revenue recognised = Nil

Because subscribtion startes on in the year 2018.In accrual basis income is recognized when it is actualy earned

What are Gee's cash receipts in 2017?

Answer is $36000

2) premium paid =$910,000

The total amount of insurance premiums paid in 2017 is equal to the insurance expense for 2017 plus the ending balance in prepaid insurance and less the beginning balance in prepaid insurance.

2017 Insurance expense $875,000
+ Ending balance in prepaid $245,000
insurance 12/31/17

- Beginning balance in prepaid $(210,000)
insurance 12/31/16
Insurance premiums paid in 2017= $910,000.

Thanks