On October 1, 2018, $30,000 of annual magazine subscriptions were sold by Cat World Magazines. The subscribed magazines are delivered on the first day of each month beginning on October 1, 2018. The total cost of the subscribed magazines is $18,000, equal to $1,500 per month. What is the amount of revenue to be recognized during 2018?
A)$30,000
B)$4,500
C)$7,500
D)$12,600

Question

Quizplus · Accepted Answer

The revenue to be recognized should be based on the number of months in which the magazines are actually delivered. Since the subscriptions start on October 1, 2018, there are only 3 months left in the year (October, November, December). Therefore, the revenue to be recognized in 2018 is 3 x $1,500 = $4,500.

On October 1, 2018, $30,000 of Annual Magazine Subscriptions Were