Question

Improvements, a home improvement magazine, collected $960,000 in subscription revenue on June 30. Each subscriber will receive an issue of the magazine in each of the next 12 months, beginning with the July issue. The company uses the accrual method of accounting. What is the amount of Subscription Revenue that has been earned by the end of December

Answer 1

Answer:

The amount of Subscription Revenue that has been earned by the end of December is $480,000

Explanation:

The computation of the amount of the subscription revenue is shown below:

= Subscription revenue × (number of months ÷ total number of months in a year)

= $960,000 × (6 months ÷ 12 months)

= $480,000

The six months is calculated from the July 1 to December 31. Since we have to record the amount for the end of the December so we take the six months