If a company has advance subscription sales totaling $45,000 for the upcoming year,when four quarterly journals will mailed to customers,the receipt of cash would be journalized as:
A)Debit Cash $45,000; credit Unearned Revenue $45,000.
B)Debit Unearned Revenue $45,000; credit Sales $45,000.
C)Debit Cash $45,000,credit Accounts Payable $45,000.
D)Debit Sales $45,000,credit Unearned Revenue $45,000.
E)Debit Prepaid Subscriptions $45,000,credit Sales $45,000.

Question

Quizplus · Accepted Answer

The company has received cash for subscription sales, but these sales have not been earned yet since the quarterly journals have not been mailed to customers. Therefore, the journal entry should debit Cash and credit Unearned Revenue, which will be recognized as revenue as each journal is mailed throughout the year.

If a Company Has Advance Subscription Sales Totaling $45,000 for the Upcoming