Jerrys Jellies sells one- and two-year mail-order subscriptions for its jelly-of-the-month business. Subscriptions are collected in advance
Question:
Jerry’s Jellies sells one- and two-year mail-order subscriptions for its jelly-of-the-month business. Subscriptions are collected in advance and credited to sales. An analysis of the recorded sales activity revealed the following:
Required:
What amount of unearned subscription revenue should Jerry's Jellies report on its December 31, 2014, balance sheet?
Sales Less cancellations Net sales Subscription expirations 2013 $520,000 10,000) $510.000 2014 $650,000 $620,000 (30,000) 2013 2014 2015 2016 $230,000 195.000 85,000 $190,000 250,000 180,000 $620,000 $510,000
Step by Step Answer:
Since subscription revenue is not earned until the customer has ...View the full answer
Financial Reporting and Analysis
ISBN: 978-0078025679
6th edition
Authors: Flawrence Revsine, Daniel Collins, Bruce, Mittelstaedt, Leon
Related Video
Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. It can be thought of as a \"prepayment\" for goods or services that a person or company is expected to supply to the purchaser at a later date. As a result of this prepayment, the seller has a liability equal to the revenue earned until the good or service is delivered. This liability is noted under current liabilities, as it is expected to be settled within a year.
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