Teenage Fanclub Printings sold annual subscriptions to their magazine for $30,000 in December 2017. The magazine is published monthly. The new subscribers received their first magazine in January 2018. 19. Show the adjusting entry should be made in January if the subscriptions were originally recorded as a liability? 0. What amount will be reported on the January 2018 balance sheet for Unearned Subscription Revenue?

Explanation: In the answer above, it was assumed that the sale of the annual subscriptions took place at the end of December 2017. If it had taken place at the beginning of December 2017, the balance in the unearned revenue would reduce by 2 months.

The subscriptions were recorded as a liability because the total amount was not earned when the sale transaction took place. Unwinding of the unearned revenue to revenue takes place at the time the subscribers get their magazine.

Therefore, monthly unwinding of unearned revenue to revenue would be $30,000 / 12 = $2,500. The adjusting entries Teenage Fanclub Printings would have raised when the initial sale took place would be: Debit Account receivable / Cash $30,000, Credit Unearned revenue $30,000. Monthly unwinding of unearned revenue will therefore be Debit Unearned revenue $2,500 Credit Revenue $2,500 till the revenue is fully recognized and the unearned revenue becomes nil.

andromache andromache · Answer 2 · 2022-03-03T13:43:24+01:00

The adjusting entry should be

Unearned revenue (liability) $2,500

Revenue $2,500.

The Balance in unearned revenue should be $27,500

Adjusting entry & the balance in unearned revenue:

The adjusting entry is

Unearned revenue (liability) $2,500 ($30,000 / 12 months)

Revenue $2,500

(being the adjusting entry is recorded)

here the liability is debited as it decreased while the revenue is credited as it increased.

Now the balance in the unearned revenue should be

= $30,000 - $2,500

= $27,500

Learn more about revenue here: https://brainly.com/question/24599521