If a Company Has Advance Subscription Sales Totaling $45,000 for Four

question 142

Multiple Choice

If a company has advance subscription sales totaling $45,000 for four quarterly journals that will mailed to customers in the upcoming year, the receipt of cash would be journalized as:

• A)Debit Cash $45,000; credit Unearned Revenue $45,000.
• B)Debit Unearned Revenue $45,000; credit Sales $45,000.
• C)Debit Cash $45,000, credit Sales $45,000.
• D)Debit Sales $45,000, credit Unearned Revenue $45,000.
• E)Debit Prepaid Subscriptions $45,000, credit Sales $45,000.

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Definitions:

Unamortized Premium

The portion of the premium paid over the par value of bonds that has not yet been amortized or written off over the life of the bond.

Bonds Payable

A liability account that records the amounts a company owes to bondholders by the bond's maturity date.

Carrying Amount

The value of an asset or liability according to a company's balance sheet, factoring in depreciation or amortization.

Unamortized Discount

The portion of a bond discount that has not yet been expensed to interest expense over the bond's life.