Metro Magazine collects cash from subscribers in advance and then mails the ­magazines to subscribers over a one- year period.

Requirements

1. Record the journal entry to record the original receipt of $ 170,000 cash.

2. Record the adjusting entry that Metro Magazine makes to record earning $ 12,000 in subscription revenue that was collected in advance.

3. Using T-accounts, post the journal entry and adjusting entry to the accounts involved and show their balances after adjustments. (Ignore the Cash account.)