Question

Mohling Company typically sells subscriptions on an annual basis, and publishes eight times a year. The magazine sells 60,000 subscriptions in January at $10 each. Recording the sale of the subscriptions involves a(n) Group of answer choices Increase to Prepaid Subscriptions and a decrease to Cash for $600,000. Increase to Cash and an increase to Unearned Subscription Revenue for $ 600,000. Increase to Subscriptions Receivable and an increase to Unearned Subscription Revenue for $75,000. Increase to Subscriptions Receivable and an increase to Subscription Revenue for $600,000.

Answer 1

Answer:

Option (B) is correct.

Explanation:

Given that,

Company sells subscriptions on an annual basis,

In January,

Mohling Company typically sells = 60,000 subscriptions

Selling price of each subscription = $10

Receipt from selling subscriptions:

= Number of subscriptions sold × Selling price of each subscription

= 60,000 × $10

= $600,000

At the time of receipt of Subscription amount below entry will be passed:

Cash A/c                              Dr. $600,000

To Unearned Subscription revenue A/c          $600,000

(To record the sale of the subscriptions)

Therefore, increase to Cash and an increase to Unearned Subscription Revenue for $ 600,000 is the correct answer.