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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 amount of the adjusting entry required at December 31, 2012 would be:

$18,000.

$15,000.

$21,000.

$24,000.

none of the above.

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Answer #1

Ans-The amount of the adjusting entry at December 31,2012 would be:

Total Subscriptions received $36,000 on June 1 2012 for complete year but at the end of December 31,2012 subscription will be recorded for 6 months i.e. $36,000*6/12= $18,000

The adjusting entry would be :

Dec.31 Unearned subscription revenue A/c Dr. ($36,000*6/12) $18,000
Subscription revenue A/c   $18,000
(To record adjusting entry)

Therefore, the correct option is (a)-$18,000.

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