Question

Account Analysis Question 3 (please show your calculation for each part): On November 1, Cosmetics Magazine started publishing a monthly magazine for which a one year subscription costs customers $24. All subscriptions require payment of the full $24 (in cash) in advance. During the month of November, the company sold 150 one-year subscriptions, and during the month of December, the company sold 400 one-year subscriptions. The company allocates the revenue evenly (i.e., such that $2.00 in revenue is allocated to each month). A. Record the transactions of the new subscriptions being sold in November and December. B. Assume that Cosmetics Magazine made no other entries related to this, aside from your answer in Part A. What adjusting entry (related to revenue) was made on December 31 (i.e., year-end)?

Answer 1

		November	December
A	No of Subsriptions	150	400
B	Cost per Subscription	24	24
C	Total Subscription for Cash Received (A*B)	3600	9600
D	Revenue to be recognized each month (D/12)	300	800
	Particulars	Debit	Credit
November	Cash	3,600.00
	Subscription Revenue		300.00
	Prerecived Subscription		3,300.00
December	Cash	9,600.00
	Subscription Revenue		800.00
	Prerecived Subscription		8,800.00
Adjustment Entry	Prerecieved Subscription	300.00
December 31	Subscription Revenue (Nov monthly revenue)		300.00