The Reader’s Digest Association, Inc. , one of the largest publishers of magazines in the world, had unearned revenues of $340.4 million on its March 31, 2012, balance sheet. The company showed $244.6 million as a current liability and $95.8 million was reported as long term. Suppose that during April, Reader’s Digest delivered magazines with a sales value of $30 million to prepaid subscribers and sold subscriptions for $35 million cash.
1. Prepare journal entries for the new subscriptions and the deliveries to prepaid subscribers.
2. Compute the amount in the unearned revenue account at the end of April 2012.