Ski Quarterly typically sells subscriptions on an annual basis, and publishes four times a year in January, April, July and October.

Ski Quarterly typically sells subscriptions on an annual basis, and publishes four times a year in January, April, July and October. The magazine sells 90,000 subscriptions in January at CHF20 each.
If Ski Quarterly publishes a quarterly financial statement at March 31, the adjusting journal entry to recognize revenue will include
a. a debit to Cash for CHF600,000.
b. a debit to Subscription Revenue for CHF600,000
c. a debit to Unearned Subscription Revenue for CHF450,000.
d. a credit to Prepaid Subscriptions for CHF450,000.

Expert Solution

Answer - C

As annual subscription has been received in Jan Itself, entry at the time of receipt of subscription would be:

Cash A/c Dr 18,00,000 ( 90,000*20)

To Unearned Subscription Revenue 18,00,000

As on 31 March, when one quarter ends, we have rendered service for 1 quarter, at that time adjusting entry will be :

Unearned Subscription Revenue A/c Dr 4,50,0000 ( 18,00,000/4*1)

To Subscription Revenue 4,50,000

ekkarill92 answered 2 years ago

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Ski Quarterly typically sells subscriptions on an annual basis, and publishes four times a year in January, April, July and October.

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