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8 October, 15:30

Universal Publishing completed the following transactions during 2018 :

Oct. 1 Sold a six-month subscription (starting on November 1), collecting cash of

$270, plus sales tax of 8%.

Nov. 15 Remitted (paid) the sales tax to the state of Tennessee.

Dec. 31 Made the necessary adjustment at year-end to record the amount of

subscription revenue earned during the year.

Journalize the transactions (explanations are not required).

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Answers (1)
  1. 8 October, 15:45
    0
    Oct. 1

    Dr Cash 291.6

    Cr Unearned Revenue 270.00

    Cr Sales Tax Payable 21.6

    Nov. 15

    Dr Sales Tax Payable 21.6

    Cr Cash 21.6

    Dec. 31

    Dr Unearned Revenue 90.00

    Cr Subscription Revenue90.00

    Explanation:

    Journal entry for Universal Publishing

    Since on Oct. 1 the company Sold a six-month subscription which start on November 1 in which the company collect cash of $270, in addition with sales tax of 8%. This means the transaction will be recorded as:

    Oct. 1

    Dr Cash 291.6

    (270+21.6)

    Cr Unearned Revenue 270.00

    Cr Sales Tax Payable 21.6

    (8%*270)

    Since on Nov. 15 the company paid the sales tax to the state of Tennessee which is $270, in addition with a sales tax of 8% this means the transaction will be recorded as:

    Nov. 15

    Dr Sales Tax Payable 21.6

    Cr Cash 21.6

    Since we were told that the company made the necessary adjustment at year-end to record the amount of subscription revenue earned during the year which 270 this means the transaction will be recorded as:

    Dec. 31

    Dr Unearned Revenue 90.00

    (270: 3months)

    Cr Subscription Revenue90.00
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