Problem

Applying the revenue recognition principle [5 min]Northwest Magazine sells subscriptions f...

Applying the revenue recognition principle [5 min]

Northwest Magazine sells subscriptions for $36 for 12 issues. The company collects cash in advance and then mails out the magazines to subscribers each month.

Requirement

1. Apply the revenue recognition principle to determine

a. when Northwest Magazine should record revenue for this situation.


b. the amount of revenue Northwest Magazine should record for three issues.

Step-by-Step Solution

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