CondNast 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 CondNast (a) collected $ 420 million in 2015 for magazines that will be delivered later in 2015 and 2016, and (b) delivered $ 204 million worth of magazines on these subscriptions in 2015.
Required:
1. Using the information given, indicate the accounts, amounts, and accounting equation effects (1 for increase, 2 for decrease, and NE for no effect) of transactions (a) and (b).
2. Using the information given, prepare the journal entries that would be recorded in 2015 and 2016.