Venible newspapers sold 6,000 of annual subscriptions at $125 each on June 1. How much unearned revenue will exist as of December 31?

Question

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Unearned revenue is the amount for services or goods which have not yet been delivered or performed. Since the subscriptions were sold on June 1 and cover a year, by December 31, 7 months of the subscription have been provided (June to December), leaving 5 months unearned. The calculation is: 6000 subscriptions * $125 each = $750,000 total annual revenue. For 5 months unearned out of 12, the unearned revenue is (5/12) * $750,000 = $312,500.

Venible Newspapers Sold 6,000 of Annual Subscriptions at $125 Each