Madson Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 75,000 subscriptions in January at $10 each. What entry is made in January to record the sale of the subscriptions?
A) Subscriptions Receivable 750,000 Subscription Revenue 750,000
B) Cash 750,000 Unearned Subscription Revenue 750,000
C) Subscriptions Receivable 125,000 Unearned Subscription Revenue 125,000
D) Prepaid Subscriptions 750,000 Cash 750,000

Question

Quizplus · Accepted Answer

The entry records cash received for subscriptions as a liability (Unearned Subscription Revenue) because the revenue is not yet earned.

Madson Company Typically Sells Subscriptions on an Annual Basis, and Publishes