Question

Question 1

Time Traveler Magazine completed the following transactions during 2016:

• Oct 31: Sold one-year subscriptions, collecting cash of $1,750, plus HST of 13%.
• Dec 31: Remitted (paid) HST to Canada Revenue Agency (CRA).
• Dec 31: Made the necessary adjustment at year-end.

Journalize these transactions and then report any liability on the company’s balance sheet at December 31st.

Answer 1

Solution 1:

Journal Entries - Time Traveler Magazine
Event	Date	Particulars	Debit	Credit
1	31-Oct	Cash Dr ($1,750*113%)	$1,977.50
		To Unearned Subscription revenue		$1,750.00
		To HST Payable		$227.50
		(To record cash received for subscrption)
2	31-Dec	HST Payable Dr	$227.50
		To Cash		$227.50
		(To record payment of HST)
3	31-Dec	Unearned Subscription Revenue Dr	$291.67
		To Subscription Revenue ($1,750*2/12)		$291.67
		(To record subscription revenue)

Liability reported on company's balance sheet at December 31:

Unearned Subscription Revenue = $1,750 - $291.67 = $1,458.33