Problem
Journalizing and posting an adjusting entry for unearned revenue
Southern Magazine collects cash from subscribers in advance and then mails the magazines to subscribers over a one-year period.
Requirements
1. Record the journal entry to record the original receipt of $150,000 cash.
2. Record the adjusting entry that Southern Magazine makes to record earning $9,000 in subscription revenue that was collected in advance.
3. Using T-accounts, post the journal entry and adjusting entry to the accounts involved and show their balances after adjustments. (Ignore the Cash account.)