On March 31, Phoenix, Inc

question 208

Multiple Choice

On March 31, Phoenix, Inc. paid Melanie Publishing Company $15,480 for a 3-year subscription for five different magazines. The subscriptions started immediately. What amount should appear in the Prepaid Subscription account for Phoenix Company after adjustments on December 31 each year assuming Phoenix using a calendar reporting period?

• A) $15,480; $11,610; $6,540; $1,290.
• B) $3,870; $5,160; $5,160; $1,290.
• C) $5,160; $5,160; $5,160.
• D) $11,610; $6,450; $1,290; $0.
• E) The answer cannot be determined based on the information given.

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Definitions:

Portfolio

A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual, exchange-traded, and closed funds.

Expected Return

The anticipated return on an investment, considering the probabilities of various outcomes.

Downside Risk

The potential loss that could occur in an investment due to adverse price movements.

Geometric Average Return

A method for calculating the average rate of return on an investment, which accounts for the effects of compound interest.