On October 1, 2019, Paige Turner Publishing received $5,400 in cash for subscriptions covering one year, recording the entry as a debit to Cash and a credit to Unearned Subscriptions. The correct adjusting entry at December 31, 2019, is

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The journal entry made on October 1, 2019, recorded the receipt of the cash for the entire year's subscription in advance. However, at the end of the accounting period, December 31, only a portion of the subscription revenue is actually earned. Therefore, an adjusting entry is needed to reflect the portion of the subscription revenue that has been earned. The adjusting entry should debit the Unearned Subscriptions account and credit the Subscriptions Income account for the amount of subscription revenue that has been earned, which is $1,350 ($5,400/4, since there are 4 quarters in a year). Thus, the correct answer is A.

On October 1, 2019, Paige Turner Publishing Received $5,400 in Cash