Reader,Inc.collected $12,000 in October 2011 from customers in exchange for 12-month subscriptions to its monthly magazine Reader.The October issue was the first issue of the subscription.How much revenue should the company report on its income statement for the year ended March 31,2012?
A)$12,000
B)$8,000
C)$6,000
D)No revenue will be recognized until all the magazines are delivered.

Question

Quizplus · Accepted Answer

The company should recognize revenue proportionally over the subscription period. By March 31, 2012, six months of the 12-month subscription period have passed, so $6,000 should be recognized as revenue.