Morbes Magazine is a magazine publisher who began their operations on April 1, 2

Question

 Morbes Magazine is a magazine publisher who began their operations on April 1, 2018. On this date, Morbes sold 40,000 one-year subscriptions, with each subscriber paying $36. Subscribers are required to pre-pay for their subscriptions, thus Morbes received the cash from the 40,000 subscriptions on April 1, 2018. Due to rising costs, Morbes changed their subscription fee to $39 per year beginning April 1, 2019, and 29,000 customers choose to renew their subscriptions, again paying the full amount to Morbes on April 1, 2019. Due to a feature article about billionaire tycoon Betty DeRose in the August, 2019 issue, 5,500 new subscribers signed up for yearly subscriptions beginning in September, 2019, at a rate of $39 per year. All 5,500 subscribers paid the full amount due to Morbes on September 1, 2019. Calculate the amount of unearned revenue shown in Morbes' balance sheet at December 31, 2019. 

Explanation / Answer

Amount of unearned revenue relating to April 1,2019 subscriptions = (29000*39)/12*3= $282750 Amount of unearned revenue relating to Spetember 1,2019 subscriptions = (5500*39)/12*8= $143000 Amount of unearned revenue shown in Morbes' balance sheet at December 31, 2019 = 282750+143000= $425750

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