Pemco Enterprises sells annual memberships to its shooting lodge. The memberships cost $310 each. On January 1, Pemco sold 2,800 memberships and received cash. What journal entry should Pemco Enterprises make on January 31st if adjusting entries are completed monthly.

Question

Quizplus · Accepted Answer

On January 31st, Pemco should recognize the revenue earned for the month. Since the memberships are for a year, 1/12 of the revenue is earned each month. Therefore, Pemco should debit Unearned Revenue and credit Membership Revenue for the amount earned in January.

Pemco Enterprises Sells Annual Memberships to Its Shooting Lodge