On April 1, Santa Fe, Inc. paid Griffith Publishing Company $1,548 for 36-month subscriptions to several different magazines. Santa Fe debited the prepayment to a Prepaid Subscriptions account, and the subscriptions started immediately. What adjusting entry should be made by Santa Fe, Inc. for the adjustment on December 31 of the first year assuming the company is using a calendar reporting period and no previous adjustments had been made?

Debit Subscription Expense $516 and credit Prepaid Subscriptions $516.

Debit Prepaid Subscriptions $516 and credit Subscription Expense $516.

Debit Subscription Expense $387 and credit Cash $387.

Debit Unearned Subscriptions $387 and credit Subscription Expense $387.

Debit Subscription Expense $387 and credit Prepaid Subscriptions $387.

Answer rating: 100% (QA)

Solution Subscription expense for the recognized m... View the full answer