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On April 1, Griffith Publishing Company received $33,480 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. Assuming adjustments are only made at year-end, what is the adjusting entry that should be recorded by Griffith Publishing Company on December 31 of the first year?

Respuesta :

Explanation:

The adjusting entry is as follows:

On December 31

Unearned revenue Dr $8,370

        To Fees earned $8,370

(Being the unearned revenue is recorded)

The computation is shown below:

= Total 36 months subscription received amount ÷ Given months

= $33,480 ÷ 36 months

= $930

So, for nine months, it is

= $930 × 9 months

= $8,370

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