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Multiple Choice Question 128 Concord Corporation typically sells subscriptions on an annual basis, and publishes 6...

Multiple Choice Question 128

Concord Corporation typically sells subscriptions on an annual basis, and publishes 6 times a year. The magazine sells 72000 subscriptions in January at $8 each. What entry is made in January to record the sale of the subscriptions?

A. Prepaid Subscriptions 576000
     Cash 576000

B. Cash 576000

     Unearned Subscription Revenue 576000

C. Subscriptions Receivable 96000
     Unearned Subscription Revenue 96000

D. Subscriptions Receivable 576000
     Subscription Revenue 576000

Business   Accounting   
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Answer #1

Ans:B

xx Jan, xxxx

Cash A/c Dr. 576,000

To Unearned subscription Revenue A/c Cr. 576000

[Being subscriptions received for the year in the beginning of the year]

Working Notes:

1. Cash is received so debited to Cash A/c.

2. Subscription money is recognized at the time of publishing time. It is said to be earned at the time of publishing. Since it is not published at the beginning of the year, so credited to Unearned subscription a/c which is a liability.

3. 72000 subscriptions x 6 times publishing money= 576000

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