Question

: On June 1, Hunting Man Magazine collected cash of $63,000 on future annual subscriptions starting on July 1. Requirements

1. Journalize the transaction to record the collection of cash on June 1.

2. Journalize the transaction required at December 31, the magazine’s year-end, assuming no revenue earned has been recorded. (Round adjustment to the nearest whole dollar.)

Short answer

1. On 1^st June cash collection will be $63,000
2. On 31^st December the unearned revenue will be $31,500

Step-by-step solution

Benefits of Unearned Revenue

Receiving unearned money can provide a sizable cash income that may be applied to delivering the goods and services promised. This indicates that the business does not require a significant initial investment.

Journal Entries

Date	Particulars	Debit	Credit
June, 01	Cash	$63,000
	Unearned revenue		$63,000
	(To record collected cash for future services)
Dec, 31	Unearned revenue ($63,000*6/12)	$31,500
	Service Revenue		$31.500
	(To record service revenue earned that was collected in advance.)