Question

S ion 223 Question 12 Corporation publishes a monthly magazine, Caras. Subscriptions to the magazine cost $35 per year. During September 2012. No beginning with the October issue September 2018, Novedades se 20.000 Instructions (a) Prepare the entry in September for the receipt of the subscriptions. Prepare the adjusting entry at December 31, 2018, to record subscription ruvenue earned in ld Prepare the adjusting entry at March 31, 2019, to record subscription revenue eamed in the the year ended Depember 31, 2018 first quarter of 2019 TTT Arint 3(121) TEE 25

Answer 1

One year subscriptions costs $35 and 20,000 magazines were sold for October. So total amount received will be 20,000 * 35 = $ 7,00,000.

Entry for amount received will be as follows in September :-

Cash/Bank..... Dr 7,00,000

To Advance for subscriptions7,00,000

The amount has been received for period of 12 months and the revenue to be recognised on 31 Dec 2018 will be as follows

One fourth of revenue will be recognised for a period of 3 months out of subscriptions received for 12 months.

Advance for subscriptions..Dr 175,000

To Revenue from subscriptions 175,000

(being revenue for period recognised)

Similarly for quarter ending March 31, the same amount will be recognised as revenue

Advance for subscriptions.. Dr 175,000

To revenue from subscription 175,000

Balance of $300,000 will be shown as advance under liability and will be adjusted as and when time passes.