PrimeFlix sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the...

PrimeFlix sells one-year online subscriptions for viewing classic movies. Customers are required to pay for the subscription at the beginning of the subscription period. On April 1, 2021, total sales of one-year subscriptions are $12,000. What is the adjusted balance of Deferred Revenue on December 31, 2021?

$9,000.
$3,000.
$0.
$12,000.

Expert Solution

Answer :-

Total subscription received on 1 April 2021 = $ 12,000

Total Months for which subscription is received = 12 Months ( One year )

Months Relating to year 2022 for which subscription received on 1 April 2021 = 3 Months

So the Revenue is to be deferred for the 3 Months

Adjusted balance of Deferred Revenue on December 31, 2021 = $ 12,000 *3 /12 = $ 3,000

Deferred Revenue = $ 3,000

So 2ND option is correct

ekkarill92 answered 2 years ago

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