On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The subscriptions started immediately.
-What is the amount of revenue that should be recorded by Griffith Publishing Company for the second year of the subscription assuming the company uses a calendar-year reporting period?
A) $129.
B) $430.
C) $516.
D) $387.
E) $0.

Question

On April 1, Griffith Publishing Company received $1,548 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The subscriptions started immediately. 
-What is the amount of revenue that should be recorded by Griffith Publishing Company for the second year of the subscription assuming the company uses a calendar-year reporting period?
A) $129.
B) $430.
C) $516.
D) $387.
E) $0.

Quizplus · Accepted Answer

Since the subscriptions started immediately and the company uses a calendar-year reporting period, the second year of the subscription would be from January 1 to December 31. Therefore, the revenue recognized for the second year would be (1/36) x $1,548 x 12 = $516.

On April 1, Griffith Publishing Company Received $1,548 from Santa