If a company has advance subscription sales totaling $45,000 for four quarterly journals that will mailed to customers in the upcoming year, the receipt of cash would be journalized as:
A)Debit Cash $45,000; credit Unearned Revenue $45,000.
B)Debit Unearned Revenue $45,000; credit Sales $45,000.
C)Debit Cash $45,000, credit Sales $45,000.
D)Debit Sales $45,000, credit Unearned Revenue $45,000.
E)Debit Prepaid Subscriptions $45,000, credit Sales $45,000.

Question

Quizplus · Accepted Answer

The company has received cash in advance for the subscription sales, so the entry should reflect this as a liability, "unearned revenue", until the company actually delivers the journals to the customers. Therefore, the entry should be to debit cash and credit unearned revenue.

If a Company Has Advance Subscription Sales Totaling $45,000 for Four