Homework Answers
Correct answer------------(a) Under cash basis of accounting, there will be zero balance in the prepaid subscription account on December 31, 20x1
.
The cash basis of account will record subscription expense for entire advance subscription hence there will be zero balance in the prepaid subscription account on December 31, 20x1.
Under accrual accounting 6 month's subscription will be recorded as expense for $10923.....(65539/36 months x 6 moths).
There will be prepaid subscription of $54616 in accrual accounting.
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