On April 1,Garcia Publishing Company received $1,548 from Otisco,Inc.for 36-month subscriptions to several different magazines.The company credited Unearned Fees for the amount received and the subscriptions started immediately.Assuming adjustments are only made at year-end,What is the adjusting entry that should be recorded by Garcia Publishing Company on December 31 of the first year?
A)debit Unearned Fees,$1,548; credit Fees Earned,$1,548.
B)debit Unearned Fees,$516; credit Fees Earned,$516.
C)debit Unearned Fees,$1,161; credit Fees Earned,$1,161.
D)debit Unearned Fees,$129; credit Fees Earned,$129.
E)debit Unearned Fees,$387; credit Fees Earned,$387.

Question

Quizplus · Accepted Answer

The subscription period from April 1 to December 31 is 9 months. The monthly revenue is $1,548 / 36 months = $43. Therefore, for 9 months, the revenue earned is $43 * 9 = $387.

On April 1,Garcia Publishing Company Received $1,548 from Otisco,Inc