Question

On April 1, Garcia Publishing Company received $30,780 from Otisco, Incorporated for 36-month subscriptions to several different magazines. The company credited Unearned Revenue for the amount received and the subscriptions started immediately. Assuming adjustments are only made at year-end, what is the adjusting entry that should be recorded by Garcia Publishing Company on December 31 of the first year

Answer 1

Based on the total amount that Garcia Publishing received from Otisco, the adjusting entry that Garcia Publishing will record at year end is debit Unearned fees $7,695 ; credit fees earned $7,695

What amount would be recorded at year end?

First, find the monthly subscription:

= 30,780 / 36

= $855

From the month of April till December is 9 months which means the amount to be recognized is:
= 855 x 9

= $7,695

The Unearned fees will then be debited by $7,695 to show that some of the subscription for the year is being recognized.

The fees earned account will be credited like it normally would when revenue comes in from subscriptions.

Find out more on unearned fees at https://brainly.com/question/13977369

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