Asked by Ma Michelle Sison on Jul 17, 2024
Verified
A company receives $360 for a 12-month trade magazine subscription on August 1. The adjusting entry on December 31 is a debit to Unearned Subscription Revenue, $150, and a credit to Subscription Revenue, $150.
Accrued Expenses
Expenses that have been incurred but not yet paid or recorded in the company's accounts.
Trade Magazine
A publication focused on a specific industry or profession, often containing news, trends, and articles of interest to those in the field.
Subscription Revenue
Income generated from customers who pay recurrently for access to a product or service over a subscription period.
- Absorb the foundational knowledge of adjusting entries and their influence on financial documentation.
- Comprehend the range and objectives of adjusting entries in the sphere of accounting, which comprises accrued revenues, accrued expenses, deferred revenues, and prepaid expenses.
Verified Answer
NW
nejahlee williamsJul 17, 2024
Final Answer :
True
Explanation :
This is true because by December 31, 5 months would have passed since August 1, leaving 7 months of the subscription remaining. Therefore, $150 of the subscription revenue can be recognized as earned and the remaining $210 would still be considered unearned. The adjusting entry debits the unearned subscription revenue account to reduce the balance by $150, and credits the subscription revenue account with the same amount to recognize the revenue earned during the period.
Learning Objectives
- Absorb the foundational knowledge of adjusting entries and their influence on financial documentation.
- Comprehend the range and objectives of adjusting entries in the sphere of accounting, which comprises accrued revenues, accrued expenses, deferred revenues, and prepaid expenses.