Here are some financial records for Accounting Plus Magazine which started operations in October 2021. Sales for its first month were as follows: $$\begin{array} { | c | c | c | c | }
\hline \text { Subscriptions sold } & \begin{array} { c }
\text { Price per } \
\text { subscription }
\end{array} & \begin{array} { c }
\text { Subscription start } \
\text { date }
\end{array} & \begin{array} { c }
\text { Subscription term } \
\text { (months) }
\end{array} \
\hline 16,400 & 25 & \text { Oct 1 } & 6 \text { months } \
\hline \mathbf { 1 1 , 8 0 0 } & \mathbf { 4 0 } & \text { Oct 1 } & \mathbf { 1 2 } \text { months } \
\hline
\end{array}$$ What would be the subscription revenue to be recognized for the month of Oct 2021? (Round to the nearest dollar).
A)$68,333
B)$107,667
C)$774,333
D)$882,000

Question

Here are some financial records for Accounting Plus Magazine which started operations in October 2021. Sales for its first month were as follows: $$\begin{array} { | c | c | c | c | } 
\hline \text { Subscriptions sold } & \begin{array} { c } 
\text { Price per } \
\text { subscription }
\end{array} & \begin{array} { c } 
\text { Subscription start } \
\text { date }
\end{array} & \begin{array} { c } 
\text { Subscription term } \
\text { (months) }
\end{array} \
\hline 16,400 & 25 & \text { Oct 1 } & 6 \text { months } \
\hline \mathbf { 1 1 , 8 0 0 } & \mathbf { 4 0 } & \text { Oct 1 } & \mathbf { 1 2 } \text { months } \
\hline
\end{array}$$ What would be the subscription revenue to be recognized for the month of Oct 2021? (Round to the nearest dollar).
A)$68,333
B)$107,667
C)$774,333
D)$882,000

Quizplus · Accepted Answer

To calculate the subscription revenue to be recognized for the month of October 2021, we need to determine the total subscription revenue for each subscription type and then recognize the portion of revenue that applies to October 2021.

For the 6-month subscription, the total subscription revenue is:

16,400 subscriptions × $25 per subscription = $410,000

To determine the portion of revenue that applies to October 2021, we need to divide the total revenue by 6 (the total number of months in the subscription) and then multiply by the number of months in October 2021 (1):

$410,000 ÷ 6 * 1 = $68,333 (rounded to the nearest dollar)

For the 12-month subscription, the total subscription revenue is:

11,800 subscriptions × $40 per subscription = $472,000

To determine the portion of revenue that applies to October 2021, we need to divide the total revenue by 12 (the total number of months in the subscription) and then multiply by the number of months in October 2021 (1):

$472,000 ÷ 12 * 1 = $39,333 (rounded to the nearest dollar)

Therefore, the total subscription revenue to be recognized for the month of October 2021 is:

$68,333 + $39,333 = $107,667 (rounded to the nearest dollar)

Therefore, the best choice is B.

Here Are Some Financial Records for Accounting Plus Magazine Which