E10-6 Determining and Recording the Financial Statement Effects of Unearned Subs

Question

E10-6 Determining and Recording the Financial Statement Effects of Unearned Subscription Revenue [LO 10-2] The following information applies to the questions displayed below] Riesen Publishers is a publisher of magazines. Its accounting policy for subscriptions follows: Revenues Sales of our magazine subscriptions are deferred (as unearned revenue) and recognized as revenues proportionately over the subscription period. Assume that Riesen Publishers (a) collected $570 million in 2015 for magazines that will be delivered later in 2015 and 2016, and (b) delivered $279 million worth of magazines on these subscriptions in 2015

Explanation / Answer

Effect of transaction :

Transaction Assets = Liabilities + Stockholder's equity (a) Cash 57000000 Unearned revenue 57000000 (b) Unearned revenue -27900000 Earned revenue 27900000

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