Question: Pewter Publishing Company PPC pre pares and publishes a monthly newsletter

Pewter Publishing Company (PPC) pre-pares and publishes a monthly newsletter for an industry in which potential circulation is limited. Because information provided by the newsletter is available only piecemeal from other sources and because no advertising is carried, the subscription price for the newsletter is relatively high. To increase circulation, PPC recently purchased a contact list from the industry’s trade association for $ 110,000. PPC then engaged in a campaign to increase circulation. The campaign involved extensive use of long- distance telephone calls to industry members on the list who were not current subscribers. The telephone cost of the campaign was $ 38,000 plus salary payments to individuals who made the calls amounting to $ 51,000. As a direct result of the campaign, new one- year subscriptions at $ 175 each generated revenue of $ 294,350. New three- year subscriptions at $ 450 each generated revenue of $ 225,450, and new five- year subscriptions at $ 625 each generated $ 187,500. Cancellations are rare, but when they occur, refunds are made on a half- rate basis (e. g., if a subscriber has yet to receive $ 100 worth of newsletters, $ 50 is refunded). The subscription campaign was conducted during August 20X0. New subscriptions began with the October 20X0 issue of the monthly newsletter. The company’s accounting year ends 31 December.

Identify the specific accounting issues involved in recognizing revenue and costs for PPC. Calculate the related assets, liabilities, revenue, and expenses that would be reported by the company for 20X0 on its SFP and SCI.

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  • CreatedFebruary 17, 2015
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