Part A:

Part B:

Problem #2: Adjusting Entries (54 points) You must determine the proper GAAP treatment of the items described in two scenarios presented below. In the scenarios, you will prepare and post journal entries for one or more transactions as requested In each scenario, you will prepare the necessary adjusting entry in general journal form and post the adjustment to the relevant T-accounts. You will need to compute the account balances to answer any follow up questions as well as to post entries for transactions in the following year when requested. Please note that you will not use all of the T-accounts provided in some scenarios. You must use Cash to record some entries. T-accounts for Cash are not provided as they would be affected by many other transactions. Therefore you will only partially post those entries. Scenario #1: Magazine Subscriptions (14 points) 1. On December 31, 2017, The Active Accountant reported Unearned Subscriptions Revenue of $4,100,000. That balance included $2,830,000 for subscriptions to issues to be published in 2018 and $1,270,000 for issues to be published in 2019. During 2018, the magazine sold subscriptions for cash of $17,500,000 that consisted of: For issues to be published in 2018 For issues to be published in 2019 For issues to be published in 2020 9,850,000 $5,360,000 $2,290,000 Prepare the general journal entry to record the cash received for the subscriptions sold during 2018. Post the entry to the relevant T-account(s) on the following page and compute the resulting balance(s) at December 31, 2018 before adjustment. a