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Sheridan Company Ltd. publishes a monthly sports magazine, Fishing Preview. Subscriptions to the magazine cost $15 per year. During November 2017, Sheridan sells 12,880 subscriptions for cash, beginning with the December issue. Sheridan prepares financial statements quarterly and recognizes subscription revenue at the end of the quarter. The company uses the accounts Unearned Subscription Revenue and Subscription Revenue. The company has a December 31 year-end.Prepare the entry in November for the receipt of the subscriptions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)DateAccount Titles and ExplanationDebitCreditNov.SHOW LIST OF ACCOUNTSPrepare the adjusting entry at December 31, 2017, to record subscription revenue in December 2017. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)DateAccount Titles and ExplanationDebitCreditDec. 31

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Answer:

Debit Cash account $193,200

Credit Unearned Subscription Revenue $193,200

Being entries for the receipt of the subscriptions in November

Debit Unearned Subscription Revenue $16,100

Credit Subscription Revenue $16,100

Being entries for the revenue earned in December 31, 2017

Explanation:

When a fee is received in advance for a service yet to be rendered, the revenue for such fee is said to be unearned. The entries required are

Debit Cash account and Credit Unearned fees or deferred revenue.

As the service is performed and the revenue is earned, debit Unearned fees and credit revenue.

Total subscription sold

= $15 * 12,880

= $193,200

Amount earned in December

= 1/12 * $193,200

= $16,100

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