Question

Sports Magazine Company received advance payments of $5,000 from subscribers during 2018. On December 31, 2018,...

Sports Magazine Company received advance payments of $5,000 from subscribers during 2018. On December 31, 2018, $1,200 worth of magazines still had not been shipped. After the adjustments are recorded on December 31, 2018, the balances in the related accounts will be:

Unearned Subscriptions: $3,800; Magazine Revenue: $1,200

Unearned Subscriptions: $5,000; Magazine Revenue, $0

Unearned Subscriptions: $1,200; Magazine Revenue, $3,800

Unearned Subscriptions: $0; and Magazine Revenue: $5,000

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Answer #1
Unearned Subscriptions: $1,200; Magazine Revenue, $3,800
Explanation
1 Entry at the time of collection of advance -
Cash Account    Dr $       5,000
Unearned Subscription $       5,000
2 Entry at the time of revenue due-
Unearned Subscription $       3,800
     Magazine revenue $       3,800
Note : Balance of Unearned Subscription = (5000 -3800) = $1200
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