Metlock Magazine sold 11,280 annual subscriptions on August 1, 2017, for $20 each. Prepare Metlock's August 1, 2017, journal entry and the December 31, 2017, annual adjusting entry, assuming the magazines are published and delivered monthly.

cash 225,600

unearned subscriptions revenue 225,600

to record sales of magazines subscriptions

unearned subscriptions revenue 225,600

subscription revenue 225,600

to record accrued earnings from magainzes subcription

Explanation:

We will enter the subscriptions as unearned because, the company has the obligation to deliver 12 magazines to each customer. The revenue will be accrued over time along with the magazines delivered.

August 1st:

11,280 magazines subscriptions x $20 = $225,600

August 1st to December 31th: 5 months

earned portion: 225,600 x 5/12 = 94,000