3SE

Question

: On June 1, Hunting Man Magazine collected cash of $63,000 on future annual subscriptions starting on July 1. Requirements

1. Journalize the transaction to record the collection of cash on June 1.

2. Journalize the transaction required at December 31, the magazine’s year-end, assuming no revenue earned has been recorded. (Round adjustment to the nearest whole dollar.)

Step-by-Step Solution

Verified

Answer

On 1^st June cash collection will be $63,000
On 31^st December the unearned revenue will be $31,500

1Benefits of Unearned Revenue

Receiving unearned money can provide a sizable cash income that may be applied to delivering the goods and services promised. This indicates that the business does not require a significant initial investment.

2Journal Entries

Date	Particulars	Debit	Credit
June, 01	Cash	$63,000
	Unearned revenue		$63,000
	(To record collected cash for future services)

Dec, 31	Unearned revenue ($63,000*6/12)	$31,500
	Service Revenue		$31.500
	(To record service revenue earned that was collected in advance.)

2SE

4TI

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