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Blossom Company Ltd. publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $28 per year. During November 2022, Blossom sells 12,000 subscriptions for cash, beginning with the December issue. Blossom prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue. The company has a December 31 year-end.

Required:
Prepare the entry in November for the receipt of the subscriptions.

Respuesta :

anthougo

The Blossom Company Ltd. will prepare the following journal entry in November to record the receipt of the subscription:

Journal Entry:

November, 2022:

Debit Cash $336,000

Credit Unearned Subscription Revenue $336,000

  • To record the receipt of the subscription.

Data and Calculations:

Subscriptions per magazine per year = $28

Quarterly revenue per magazine = $7 ($28/4)

Number of subscriptions sold in November, 2022 = 12,000

Total receipts in November = $336,000

November, 2022:

Cash $336,000 Unearned Subscription Revenue $336,000

December 31, 2022:

Unearned Subscription Revenue $84,000 Subscription Revenue $84,000

Thus, to recognize the Subscription Revenue for the quarter, Blossom will debit Unearned Subscription Revenue with $84,000 ($28 x 12,000 x 1/4).

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