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SuMan Magazine Publishing Company sells magazine subscriptions on an annual basis covering 12 issues. Subscriptions totaling...

SuMan Magazine Publishing Company sells magazine subscriptions on an annual basis covering 12 issues. Subscriptions totaling $36,000 were collected on June 1, 2012 and the total amount collected was recorded in a temporary account. The monthly magazines were delivered in June through December. The required adjusting entry at December 31, 2012 would include:

a debit to Unearned Magazine Revenues.

a credit to Magazine Revenues.

a debit to Accounts Receivable.

a debit to Magazine Revenues.

none of the above.

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ANSWER TO THIS QUESTION

SuMan Magazine Publishing Company sells magazine subscriptions on an annual basis covering 12 issues. Subscriptions totaling $36,000 were collected on June 1, 2012 and the total amount collected was recorded in a temporary account. The monthly magazines were delivered in June through December. The required adjusting entry at December 31, 2012 would include:

a debit to Unearned Magazine Revenues.

a credit to Magazine Revenues.

a debit to Accounts Receivable.

a debit to Magazine Revenues.

none of the above.

SOLUTION:

HERE IN THE QUESTION IT IS GIVEN THAT SUBSCRIPTION RECEIVED IN ADVANCE ON JUNE 1, 2012 FOR THE YEAR ENDING 31 DECEMBER 2016 AND AMOUNT COLLECTED IS RECORDED IN A TEMPORARY ACCOUNT. HENCE WE MADE ENTRY ON JUNE 1,2012 IS

BANK A/C DR….. $36,000 TO UNEARNED MAGAZINE REVENUES $36,000 ( BEING AMOUNT RECORDED)

AT THE YEAR END I.E: DECEMBER 31. 2012

A ADJUSTING ENTRY TRANSFER i.e:

UNEARNED MAGAZINE REVENUES $36,000 TO PROFIT AND LOSS A/C $36,000 (BEING ADJUSTMENT ENTRY MADE )

HENCE CORRECT ANSWER IS : TO UNEARNED MAGAZINE REVENUES $36,000

jeff jeffy answered 1 year ago

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