Income statement for subscriptions revenue


Problem 1) Garcia Corporation received cash of $9,000 on August 1, 1998 for one year's rent in advance and recorded the transaction with a credit to Rent Revenue. The December 31, 1998 adjusting entry is

a. debit Rent Revenue and credit Unearned Rent, $3,750.

b. debit Rent Revenue and credit Unearned Rent, $5,250.

c. debit Unearned Rent and credit Rent Revenue, $3,750.

d. debit Cash and credit Unearned Rent, $5,250.

Problem 2) In November and December 1998, Kay Co., a newly organized magazine publisher received $90,000 for 1,000 three-year subscriptions at $30 per year, starting with the January 1999 issue. Kay included the entire $90,000 in its 1998 income tax return. What amount should Kay report in its 1998 income statement for subscriptions revenue?

a. $0.

b. $5,000.

c. $30,000.

d. $90,000.

Problem 3) Porter Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial
balance at December 31, 1998, included the following expense accounts:

Accounting and legal fees $140,000

Advertising 120,000

Freight-out 75,000

Interest 60,000

Loss on sale of long-term investments 30,000

Officers' salaries 180,000

Rent for office space 180,000

Sales salaries and commissions 110,000

One-half of the rented premises is occupied by the sales department.

How much of the expenses listed above should be included in Porter's selling expenses for 1998?

a. $230,000.

b. $305,000.

c. $320,000.

d. $395,000.

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Accounting Basics: Income statement for subscriptions revenue
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