On January 2,2018,AAA Publishing,Inc.received a one-year subscription for $100 to one of the magazines that it publishes.At that time,it debited cash for $100 and credited Deferred Revenue for $100.After all the magazines have been delivered through December 31,2018,what journal entry needs to be recorded?
A)Debit Cash for $100 and credit Deferred Revenue for $100
B)Debit Accounts Receivable for $100 and credit Subscription Revenue for $100
C)Debit Accounts Receivable for $100 and credit Deferred Revenue for $100
D)Debit Deferred Revenue for $100 and credit Subscription Revenue for $100

Question

Quizplus · Accepted Answer

As of the end of the year,the $100 subscription has been earned.Therefore,AAA needs to debit Deferred Revenue (to decrease that liability account)and credit Subscription Revenue (to increase that revenue account for the amount of revenue earned).