Question

Wildhorse Magazine sold 9,240 annual subscriptions on August 1, 2017, for $17 each. Prepare Wildhorse’s August 1, 2017, journal entry and the December 31, 2017, annual adjusting entry, assuming the magazines are published and delivered monthly. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Answer:

Journal to be posted on August 1, 2017

Debit Cash account             $157,080

Credit Deferred revenue     $157,080

Being entries to record cash received on August 1, 2017 for subscription to be sold.

Debit Deferred revenue    $65,450

Credit  Revenue (p/l)          $65,450

Being entries to recognized revenue earned from subscription as at December 31, 2017

Explanation:

Number of subscription sold = 9240

Selling price of each = $17

Amount received = 17 × 9240

                             = $157,080

Journal to be posted on August 1, 2017

Debit Cash account             $157,080

Credit Deferred revenue     $157,080

Being entries to record cash received for subscription to be sold

On December 31 2017, the fee for 5 months would have been earned

= (5/12) × $157,080

= $65,450

Entries to be posted

Debit Deferred revenue    $65,450

Credit  Revenue (p/l)          $65,450

Being entries to recognized revenue earned from subscription as at December 31, 2017.