Physicians, Inc. subscribes to three magazines and paid $140, $90 and $76 respectively, on 1 July. The subscriptions are for one year and are recorded in Prepaid Subscriptions when paid. Six months later on 31 December, what amount is recorded for 'magazine expense' and what is the balance of the Prepaid Subscription account? Magazine Expense Prepaid Subscriptions
A) $153 $153
B) $306 $306
C) $25.50 $153
D) $25.50 $306

Question

Quizplus · Accepted Answer

The total amount paid for the subscriptions is $140 + $90 + $76 = $306. Since the subscriptions are for one year and six months have passed, half of the subscription cost, or $306 / 2 = $153, should be recorded as an expense. The remaining $153 is the balance in the Prepaid Subscriptions account.