Question

In year 8, Mondo Magazines began selling one- and two-year subscriptions to its publications. Subscriptions are collected in advance and credited to sales. An analysis of the recorded sales activity revealed the following:____________

Answer 1

Answer:

$450,000

Explanation:

Deferred subscription revenue (or unearned subscription revenue) is a liability account since your customers paid you in advance for goods or services that you must provide in the future.

The net unearned revue for 2018 and 2019 is = $390,000 and $460,000  respectively.

Of the 2018 amount, only $115,000 (= $390,000 - $115,000 - $160,000) remain as a liability during 2019 since they expire on 2020.

Of the 2019 amount, $335,000 (= $460,000 - $125,000) remain as a liability during 2019 since they expire on 2020 and 2021.

By December 31, 2019, unearned revenue = $115,000 + $335,000 = $450,000