SuMan Magazine Publishing Company sells magazine subscriptions on an annual basi
ID: 2397052 • Letter: S
Question
SuMan Magazine Publishing Company sells magazine subscriptions on an annual basis covering 12 issues. Subscriptions totaling $36,000 were collected on June 1, 2012 and the total amount collected was recorded in a temporary account. The monthly magazines were delivered in June through December. The required adjusting entry at December 31, 2012 would include: a debit to Unearned Magazine Revenues. a credit to Magazine Revenues. a debit to Accounts Receivable. a debit to Magazine Revenues. none of the above. SuMan Magazine Publishing Company sells magazine subscriptions on an annual basis covering 12 issues. Subscriptions totaling $36,000 were collected on June 1, 2012 and the total amount collected was recorded in a temporary account. The monthly magazines were delivered in June through December. The required adjusting entry at December 31, 2012 would include: a debit to Unearned Magazine Revenues. a credit to Magazine Revenues. a debit to Accounts Receivable. a debit to Magazine Revenues. none of the above. SuMan Magazine Publishing Company sells magazine subscriptions on an annual basis covering 12 issues. Subscriptions totaling $36,000 were collected on June 1, 2012 and the total amount collected was recorded in a temporary account. The monthly magazines were delivered in June through December. The required adjusting entry at December 31, 2012 would include: a debit to Unearned Magazine Revenues. a credit to Magazine Revenues. a debit to Accounts Receivable. a debit to Magazine Revenues. none of the above.Explanation / Answer
Ans: a debit to unearned Magazine revenue
Explanation: Unearned revenues are created when a company recives cash from a customer for good or services that will be provided in a future period. For eg: monthly subscriptions recieved in advance by a publishing firm. A liability exists because of the obligation to provide the service. In this case, monthly subscription was recieved in june where as the magazines were provided in december. A liability generated as soon the subscription was recieved.