Tomorrow Publications collects magazine subscriptions from customers at the time subscriptions are sold. Subscription revenue is recognized over the term of the subscription. Tomorrow Publications collected $20 million in subscription sales during its first year of operations. At December 31, the average subscription was one-fourth expired. When Tomorrow Publications collects the subscriptions from customers, which of the following account will be credited?
a. Subscriptions Expense.
b. Unearned Subscriptions Revenue.
c. None of the other three answers is correct.
d. Cash

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andromache andromache · Answer 1 · 2021-04-10T04:34:20+02:00

Answer:

b. Unearned Subscriptions Revenue.

Explanation:

In the case when the tomorrow publications wants to collect the subscriptions from customers so the following journal entry to be recorded

Cash Dr $20

To Unearned Subscriptions Revenue $20

(Being collection is recorded)

Here cash is debited as it increased the assets and credited the Unearned Subscriptions Revenue as it also increased the liabilities

Therefore the option b is correct