Question

Real Losers, a diet magazine, collected $360,000 in subscription revenue in May. 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. By the end of December, how much Subscription revenue has been earned?

Answer 1

Answer: the correct answer is $210,000. The months is which the service was given were June, July, August, September, October, Nevember, December. The total service is $360,000 which means it is $30,000 monthly. (360,000 divided by 12). $30,000 times 7 months is $210,000.

Explanation: If a company is using the accrual basis accounting method it has to record its earned revenue when services are rendered, even though cash may be received at a later date..

Answer 2

By the end of December, how much Subscription revenue has been earned is $210,000

Given:

Based on the information given each  of the subscriber will receive an issue of the magazine for each of the next 12 months starting with the June .

June to December=7 months

Subscription revenue=$360,000

Now let how much Subscription revenue has been earned

Subscription revenue=$360,000×7months/12 months

Subscription revenue=$210,000

Inconclusion By the end of December, how much Subscription revenue has been earned is $210,000.

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