Question

Assume Strong’s Fitness magazine completed the following transactions during 2019:

• March 1, 2019: Sold twelve-month subscriptions, collecting cash of $1,800, GST of 5% and PST of 7%

• December 31, 2019: Remitted GST and PST to Canada Revenue Agency

• December 31, 2019: Made the necessary adjustment at year-end to record the amount of subscription revenue earned during the year.

Assume Strong’s Fitness magazine completed the following transactions during 2019:

• March 1, 2019: Sold twelve-month subscriptions, collecting cash of $1,800, GST of 5% and PST of 7%

• December 31, 2019: Remitted GST and PST to Canada Revenue Agency

• December 31, 2019: Made the necessary adjustment at year-end to record the amount of subscription revenue earned during the year.

Required

Using the account title Unearned Subscription Revenue, journal the transactions above. Explanations are not required.

Answer 1

Journal Entries

1st March 2019

  Cash A/c...... Dr. 2016

To Subscription A/c. 1800

To Gst Psyable A/c (5% of 1800) 90

To Pst Payable A/c (7% of 1800) 126

(Being 12 month subscription sold on cash)

31 Dec 2019

Gst Payable A/c ....Dr. 90

Pst Payable A/c .....Dr. 126

To Bank 216

( Being Gst & Pst remitted to Canada Revenue Agency)

31 Dec 2019

Subscription A/c......Dr. 1800

To Revenue (1800*10 month/12month) 1500

To Unearned Subscription A/c (800*2/12)

( Being adjustment made to record the amount of subscription revenue earned during the year)

31 Dec 2019

Revenue...... Dr. 1500

To P&L A/c. 1500

(Being Revenue amount transferred to P&L)