T.J.West,publishes the Bunstelle Times.In June,he collected $96 in advance for 1-year subscriptions.He delivered the first issue in July.Assume one issue is published per month.The journal entry to record the delivery of the magazines in July would be

A) $\begin{array}{lcc}
\text { Cash } & 8.00 & \
\quad \text { Subscription Revenue } & & 8.00 \
\end{array}$

B) $\begin{array}{lccc}
\text { Unearned Subscription Revenue } & 8.00 & \
\quad \text { Subscription Revenue } & & 8.00 \
\end{array}$

C)$\begin{array}{lccc}
\text { Prepaid Subscriptions } & 8.00 & \
\quad \text { Subscription Revenue } & & 8.00\
\end{array}$

D)$\begin{array}{lccc}
\text { Prepaid Stibscriptions } & 8.00 & \
\quad\text { Cash } & &8.00 \
\end{array}$

E)$\begin{array}{lccc}
\text { Cash } & 8.00 & \
\quad\text { Prepaid Stibscriptions } & &8.00 \
\end{array}$

Question

T.J.West,publishes the Bunstelle Times.In June,he collected $96 in advance for 1-year subscriptions.He delivered the first issue in July.Assume one issue is published per month.The journal entry to record the delivery of the magazines in July would be

A) $\begin{array}{lcc}
\text {  Cash } & 8.00 & \
\quad \text { Subscription Revenue } & & 8.00 \
\end{array}$

B) $\begin{array}{lccc}
\text { Unearned Subscription Revenue } & 8.00 & \
\quad \text { Subscription Revenue } & & 8.00 \
\end{array}$

C)$\begin{array}{lccc}
\text {  Prepaid Subscriptions } & 8.00 & \
\quad \text { Subscription Revenue } & & 8.00\
\end{array}$

D)$\begin{array}{lccc}
\text {  Prepaid Stibscriptions } & 8.00 & \
\quad\text {  Cash } & &8.00  \
\end{array}$

E)$\begin{array}{lccc}
\text {  Cash } & 8.00 & \
\quad\text {  Prepaid Stibscriptions } & &8.00  \
\end{array}$

Quizplus · Accepted Answer

When a company receives payment in advance for a service, the amount is recorded as unearned revenue, a liability, because the service has not yet been provided. As the service is provided, in this case, the delivery of a magazine issue, the liability is decreased, and revenue is recognized. The correct entry moves $8 from Unearned Subscription Revenue to Subscription Revenue, reflecting the delivery of one month's issue out of a 12-month subscription for which $96 was collected in advance ($96/12 months = $8 per month).

TJWest,publishes the Bunstelle Times Cash 8.00 Subscription Revenue 8.00\begin{array}{lcc}\text { Cash } & 8.00 & \\\quad \text { Subscription Revenue } & & 8.00 \\\end{array} Cash Subscription Revenue ​8.00​8.00​

TJWest,publishes the Bunstelle Times $\begin{array}{lcc}\text { Cash } & 8.00 & \\\quad \text { Subscription Revenue } & & 8.00 \\\end{array}$