Answer: $220,000 Explanation:
Wellness has received all the revenue of the magazines from customers for the whole 12 months in advance. Wellness uses the acrual method to record their transactions. This means that all transactions are recorded in the books of the business when the transaction has taken place, i.e. the full $528,000 was recorded on the day it was received.
Because Wellness has already received money for magaizines that have not been issued and distributed yet, Wellness has an unfulfilled obligation to its customers until magazines for each of the 12 months have been distibtributed. This is known as an acrual expense to Wellness, which is a liability. This leads to the creation of the unearned revenue account, and the outstanding balance of unissued magazines sits in this account until the magaizines have been issued on a month to month basis. The first 7 months (from June to December)'s magazines have been issued, the obligation fuflfilled and revenue earned as a result. That means that there is still 5 months outstanding, and this balance still lies in the unearned revenue account. This is calculated as follows: Total amount ÷ 12 months × outstanding months = 528,000 ÷ 12 = 44,000
44,000 × 5 months = $220,000
