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Flores Company publishes a monthly sports magazine, Hunting Preview. Subscriptions to the magazine cost $25 per year. During October 2017, Flores sells 30,000 subscriptions beginning with the November issue. Flores prepares financial statements quarterly and recognizes subscription revenue earned at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue. Collapse question part (a) Prepare the entry in October for the receipt of the subscriptions.

Answer :

abiolataiwo2015

Answer:

(a)Oct. 31

Dr Cash 750,000

Cr Unearned Subscription Revenue 750,000

(b)Dec. 31

Dr Unearned Subscription Revenue 125,000

Cr Subscription Revenue 125,000

(c)Mar. 31

Dr Unearned Subscription Revenue 187,500

Cr Subscription Revenue 187,500

Explanation:

Flores Company Journal entries

(a)Oct. 31

Dr Cash 750,000

Cr Unearned Subscription Revenue(30,000 ×$25) 750,000

(b)Dec. 31

Dr Unearned Subscription Revenue 125,000

Cr Subscription Revenue 125,000

($750,000 ×2/12)

(c)Mar. 31

Dr Unearned Subscription Revenue 187,500

Cr Subscription Revenue 187,500

($750,000 ×3/12)

anthougo

a) The preparation of the entry in October for the receipt of the subscriptions in the books of Flores Company is as follows:

October 2017:

Debit Cash $750,000

Credit Unearned Subscription Revenue $750,000

b) The preparation of the adjusting entry at December 31, 2017, to record subscription revenue earned in December 2017, in the books of Flores Company, is as follows:

December 31, 2017:

Debit Unearned Subscription Revenue $125,000

Credit Subscription Revenue $125,000

c) The preparation of the adjusting entry at March 31, 2018 to record subscription revenue earned in the first quarter of 2018, in the books of Flores Company, is as follows:

March 31, 2018:

Debit Unearned Subscription Revenue $187,500

Credit Subscription Revenue $187,500

Data and Calculations:

Cost of magazine subscriptions per year = $25

Sales units of subscriptions = 30,000

Subscription Revenue received in October = $750,000 (30,000 x $25)

Subscription Revenue for two months = $125,000 (30,000 x $25 x 2/12)

Subscription Revenue for the second quarter = $187,500 (30,000 x $25 x 1/4)

Transaction Analysis:

a) October 2017: Cash $750,000 Unearned Subscription Revenue $750,000

b) December 31, 2017: Unearned Subscription Revenue $125,000 Subscription Revenue $125,000

c) March 31, 2018: Unearned Subscription Revenue $187,500 Subscription Revenue $187,500

Question Requirements:

(a) Prepare the entry in October for the receipt of the subscriptions.

(b) Prepare the adjusting entry at December 31, 2017, to record subscription revenue earned in December 2017.

(c) Prepare the adjusting entry at March 31, 2018 to record subscription revenue earned in the first quarter of 2018.

Learn more about recording adjusting entries at https://brainly.com/question/1757297

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