Question

.Capital, a business magazine, collected $480,000 in subscription revenue on May 31. Capital earns a minimum of $351,000 from the buyers who are not the subscribers. Each subscriber will receive an issue of the magazine for each of the next 12 months, beginning with the June issue. The company uses the accrual method of accounting. What is the balance in the Unearned Revenue account on December 31?

Answer 1

the balance in the unearned revenue as on Dec 31 is $200,000

Step-by-step explanation:

The computation of the balance in the unearned revenue as on Dec 31 is as follows

= Yearly subscription revenue collected ÷ total number of months in a year × given number of months

= $480,000 ÷ 12 months × 5 months

= $200,000

The five month is calculated from Dec 31 to May 31

Hence, the balance in the unearned revenue as on Dec 31 is $200,000