In November and December 2013,Bee Company,a newly organized newspaper publisher,received $72,000 for 1,000 three-year subscriptions at $24 per year,starting with the January 2,2014,issue of the newspaper.How much should Bee report in its 2013 income statement for subscription revenue?
A) $0
B) $12,000
C) $24,000
D) $72,000

Question

Quizplus · Accepted Answer

Revenue recognition principles dictate that revenue should be recognized when it is earned, regardless of when the payment is received. Since Bee Company has not provided any newspapers in 2013 (the subscriptions start in January 2014), it has not earned any subscription revenue in 2013. Therefore, the entire amount received in 2013 should be recorded as unearned revenue (a liability) on the balance sheet, and no subscription revenue should be reported in the 2013 income statement.

In November and December 2013,Bee Company,a Newly Organized Newspaper Publisher,received