Question

Ramsey 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. Subscriptions Receivable 600,000
Subscription Revenue 600,000
b. Cash 600,000
Unearned Subscription Revenue 600,000
c. Subscriptions Receivable 100,000
Unearned Subscription Revenue 100,000
d. Prepaid Subscriptions 600,000
Cash 600,000

Answer 1

Answer:

The correct answer is B

Explanation:

The journal entry to record the sale of the subscription is as:

Cash A/c.............................................................Dr       $600,000

   To Unearned Subscription Revenue A/c..........Cr      $600,000

As company made a sale of the subscription, so cash is received from sale therefore any increase in asset is debited. So, the cash account is debited. And the unearned subscription revenue is credited because cash is received against subscription sale.