Question

On April 1, Griffith Publishing Company received $24,480 from Santa Fe, Inc. for 36-month subscriptions to several different magazines. The company credited Unearned Fees for the amount received and the subscriptions started immediately. What is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year?

Answer 1

Answer:

Dr Unearned Fees, $6,120

Cr Fees Earned, $6,120

Explanation:

Based on the information given we were told that the On April 1, the Company received the amount of $24,480 for 36-month subscription in which the company credited Unearned Fees for the amount received therefore the adjusting entry that the company should be record on December 31 of the first year will be:

Dr Unearned Fees, $6,120

Cr Fees Earned, $6,120

Working:

Amount the company received $24,480 ÷Months of Subscription 36 months

*April to December will give us 9 months

Hence,

$24,480/36*9

=$680*9

=$6,1,20