On October 1, 2010, $18,000 of annual magazine subscriptions were sold by Dog World Magazines.The total cost of the subscribed magazines is $9,600, equal to $800 per month.The subscribed magazines are delivered on the first day of each month beginning on October 1, 2010.What is the amount of the cost of the magazines to be recognized during 2010?
A) $9,600
B) $8,400
C) $1,600
D) $2,400

Question

Quizplus · Accepted Answer

Revenue for 2010 is the amount earned for the 3 months of subscriptions delivered for a total of $4,500 ($18,000 x 3/12).Cost of goods sold is $2,400 (3 months x $800 per month).

On October 1, 2010, $18,000 of Annual Magazine Subscriptions Were