Record this transaction:
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Question 19 of 20
A
Keep You in the Know (KYK) magazine received $120,000 cash in annual subscriptions in December
2013. KYK is a monthly publication and all of these subscriptions commence in January 2014. What
entry should KYK make on January 31, 2014 related to the subscription services provided for one
month?
Debit?
Credit?



Answer :

Answer:

To record the transaction for the annual subscriptions received in December 2013, but commencing in January 2014, the entry on January 31, 2014 you would do this:

Debit: Unearned Revenue (Liability) for $120,000

This represents the amount received for services that have not yet been provided.

Credit: Subscription Revenue (Income) for $120,000

This accounts for the revenue earned for the services provided in January 2014.

This entry recognizes the unearned revenue as a liability until the services are provided, at which point it is recognized as subscription revenue.

Hope this helps!