Preparation for week 8

1. Better Publications, sold annual subscriptions to their magazine for $36,000 in

December, 2014. The magazine is published monthly. The new subscribers received
their first magazine in January, 2015.
1.

What adjusting entry should be made in January if the subscriptions were

originally recorded as a liability?
$36,000/12 months=$3,000
Dr.
Cr.
Unearned subscription revenue
3,000
Subscription revenue
3,000
2.

What amount will be reported on the January 2015 balance sheet for
Unearned Revenue?
$36,000 divided by 12 months so the earned revenue for each month is $3,000
From $36,000 subtract $3,000 =$33,000

2. Match the statements below with the appropriate terms by entering the appropriate
letter code in the spaces provided.
TERMS:
A. Prepaid Expenses
B. Unearned Revenues
C. Accrued Revenues
D. Accrued Expenses
STATEMENTS:
B____1.A revenue not yet earned; collected in advance.
D____2.An expense incurred; not yet paid or recorded.
C____3.A revenue earned; not yet collected or recorded.
A____4.An expense not yet incurred; paid in advance.

In week 8 we will do a simulation of buying and selling products, having a lot

attention for the accompanying accounting work.
Therefore:
3. Prepare an invoice for a pretended sale for a self-invented small sized media firm.
Think up
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_____
_____
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The company name/ logo

Quality products sold (maximum of 2)
Date
Amount sold
Unit price
Total price
Terms/ conditions
Etc.

Please ignore VAT, your company sells products, no services.

Bring two hardcopies of this invoice to class!