Question

Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 60,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?a.Prepaid Subscriptions................600,000..................Cash...................................600,000b.Subscriptions Receivable..........600,000................Subscription Revenue.............600,000c.Cash...........................600,000............Unearned Subscription Revenue.....600,000d.Subscriptions Receivable.............100,000.............Unearned Subscription Revenue....100,000

Answer 1

Answer:

C) Cash...........................600,000............Unearned Subscription Revenue.....600,000

Explanation:

January 31: 60,000 subscriptions sold

• Dr Cash account 600,000
• Cr Unearned Subscription Revenue account 600,000

Since cash is an asset account and it increases, then it should be debited.

Unearned revenue is a liability account, since the company received money in advance for future publications. When liabilities increase, they should be credited.