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Answer:
Walter Company Ltd.
Journal Entries:
a. November, 2007:
Debit Cash $132,000
Credit Unearned Subscription Revenue $132,000
To record the receipt of subscriptions for 6,000 at $22 for a year.
b. December, 2007:
Debit Unearned Subscription Revenue $11,000
Credit Subscription Revenue $11,000
To record the subscription revenue for the quarter (Dec. only)
c. March, 2008:
Debit Unearned Subscription Revenue $33,000
Credit Subscription Revenue $33,000
To record the subscription revenue for the quarter.
Explanation:
a) Data and Calculations:
Subscription cost per year = $22
Subscription sold in December 2007 = 6,000
Total revenue received in November = $132,000 (6,000 * $22)
Analysis:
Cash $132,000 Unearned Subscription Revenue $132,000
Unearned Subscription Revenue $11,000 Subscription Revenue $11,000 ($22/12 * 6,000)
Unearned Subscription Revenue $33,000 Subscription Revenue $33,000 ($22/4 * 6,000)
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