Nationwide Magazine sells 64,000 subscriptions on account in March.The subscription price is $15 each.The subscriptions start in April.The journal entry in March would include a:
A)debit to Unearned Subscription Revenue for $960,000.
B)debit to prepaid subscriptions for $960,000.
C)credit to Cash for $960,000.
D)credit to Unearned Subscription Revenue for $960,000.

Question

Quizplus · Accepted Answer

Since the subscriptions are sold on account in March but do not start until April, the revenue earned is considered unearned until the magazines are actually delivered. Therefore, the journal entry would include a credit to Unearned Subscription Revenue for the total subscription amount sold on account, which in this case is $960,000.

Nationwide Magazine Sells 64,000 Subscriptions on Account in March