Nationwide Magazine sells 60,000 subscriptions in March at $15 each. The entry is made in March to record the sale of the subscriptions would include a:
A) debit to subscriptions receivable for $900,000.
B) debit to prepaid subscriptions for $900,000
C) credit to cash for $900,000.
D) credit to unearned subscription revenue for $900,000.

Question

Quizplus · Accepted Answer

The sale of subscriptions in March generates unearned revenue since the company has not yet provided the service to the subscribers. Therefore, the entry would include a credit to unearned subscription revenue. The amount of revenue received is $900,000 (60,000 subscriptions x $15 each). Therefore, the entry would include a credit to unearned subscription revenue for $900,000.

Nationwide Magazine Sells 60,000 Subscriptions in March at $15 Each