Question

E11-16 (similar to) E Quest TransWorld Publishing completed the following transactions during 2018: (Click the loon to view the transactions.) Journalize the transactions (explanations are not required). Round to the nearest dollar. (Record debits first, then credits. Exclude explanations from journal entries.) Oct 1: Sold a six-month subsor More Info X compound entry for this transaction.) Date Oct. 1 Oct 1 Sold a six-month subscription (starting on November 1), collecting cash of $600, plus sales tax of 5% Nov 15 Remitted (paid) the sales tax to the state of Tennessee Dec. 31 Made the necessary adjustment at year-end to record the amount of Subscription revenue earned during the year. Print Done Choose from any list or enter any number in the input fields and then click Check Answer

Answer 1

Solution:

Date	Accounts and Explanation	Debit	Credit
Oct. 1	Cash	$        630
	Unearned Revenue		$        600
	Sales Tax Payable ($ 600* 5%)		$          30
	(Being Subscription received)
Nov. 15	Sales Tax Payable ($ 600* 5%)	$          30
	Cash		$          30
	( Being Sales tax paid)
Dec. 31	Unearned Revenue ( $ 600 / 6 Months * 2 Months)	$        200
	Sales Revenue		$        200
	(Being Service revenue earned)

Notes:

1) Even subscriptions received on October 1st but started service from November 1st, that is why we have recognized sales revenue for 2 months only.