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Moreno Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year.

Question:

Moreno Company publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $20 per year. During November 2022, Moreno sells 15,000 subscriptions beginning with the December issue. Moreno prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue. 


Instructions 

a. Prepare the entry in November for the receipt of the subscriptions. 

b. Prepare the adjusting entry at December 31, 2022, to record sales revenue recognized in December 2022. 

c. Prepare the adjusting entry at March 31, 2023, to record sales revenue recognized in the first quarter of 2023.

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a The entry is as follows i Unearned subscription revenue which is the amount collected in adv...View the full answer


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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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