Amass published a monthly newsletter for retail marketing managers and requires its subscribers to pay $75 in advance for a one year subscription. During the month of September 2013, Amass sold 200 one year subscriptions and received payments in advance from all new subscribers. Only 120 of the new subscribers paid their fees in time to receive the September newsletter, the other subscriptions began with the October newsletter. 

A. Use the horizontal model (or write the journal entries) to record the effects of the following items: 

1. Subscription fees received in advance during September 2013 

2. Subscription revenue earned during September 2013 

B. Calculate the amount of subscription revenue earned by Amass during the year ended December 31, 2013, for these 200 subscriptions. 

Lifetime Subscription Offer: Amass is now considering the possibility of offering a lifetime membership option to its subscribers. Under this proposal, subscribers could receive the monthly newsletter throughout their lives by paying a flat fee of $900. The one year subscription rate of $75 would continue to apply to new and existing subscribers who choose to subscribe on an annual basis. Assume that the average age of Amass's current subscribers is 38 and their average life expectancy is 78 years. Amass's average interest rate on long term debt is 12%. 

C. Using the information just given, determine whether it would be profitable for Amass to sell lifetime subscriptions. 

D. What additional information factors should Amass consider in determining whether to offer a lifetime membership option? Explain your answer.

Answer rating: 100% (QA)

1 Dr Cr Cash 15000 Subscription received in advance 15000 Working 75 x 200 15000 2 Dr Cr Subscriptio... View the full answer