A company sells 12-month popular magazine subscriptions. During the month of May, the company sells $12,000 in magazines, which will start in June. The adjusting entry to record the $1,000 of subscriptions earned in June will include a debit to which account?单项选择题
A
Unearned Subscription Revenue
B
Cash
C
Subscription Revenue Earned

Question

A company sells 12-month popular magazine subscriptions. During the month of May, the company sells $12,000 in magazines, which will start in June. The adjusting entry to record the $1,000 of subscriptions earned in June will include a debit to which account?单项选择题

A

Unearned Subscription Revenue

B

Cash

C

Subscription Revenue Earned

BlackTom AI · Accepted Answer

Unearned subscription revenue is a liability representing cash received before the company has delivered the magazines. Each month a portion of that liability is reclassified to revenue as the magazines are delivered.

1) Relevant knowledge points and concepts
- Unearned Subscription Revenue (also called deferred revenue) is a liability account. It is recorded when cash for future services is received.
- Revenue is recognized as the service is provided (accrual basis), requiring an adjusting entry that decreases the liability and increases a revenue account.
- Debits decrease liability accounts; credits increase revenue accounts.

2) Step-by-step reasoning
- The company sold $12,000 of 12-month subscriptions (starting in June). That initial sale (recorded in May) would have been: Debit Cash $12,000; Credit Unearned Subscription Revenue $12,000.
- Each month one-twelfth of the total is earned and must be reclassified from liability to revenue.

3) Calculations (intermediate steps)
- Monthly revenue recognized = $12,000 ÷ 12 months = $1,000.
- Adjusting entry for June: Debit Unearned Subscription Revenue $1,000; Credit Subscription Revenue Earned $1,000.

4) Why the correct answer is correct
- The adjusting entry must reduce the liability (unearned revenue) by the amount earned, so that liability is debited for $1,000. Simultaneously revenue is credited to reflect earned revenue. Therefore the entry includes a debit to Unearned Subscription Revenue.

5) Why the other options are incorrect
- Cash: Cash was already debited when the subscriptions were sold; the adjusting entry does not affect cash in June.
- Subscription Revenue Earned: This account is credited (not debited) in the adjusting entry to recognize revenue. The question asks which account is debited.

6) Conclusion
The adjusting entry to record the $1,000 of subscriptions earned in June includes a debit to Unearned Subscription Revenue, which matches the provided answer: Unearned Subscription Revenue.

A company sells 12-month popular magazine subscriptions. During the month of May, the company sells $12,000 in magazines, which will start in June. The adjusting entry to record the $1,000 of subscriptions earned in June will include a debit to which account?单项选择题

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