On September 1, 2020, Amazon sells 2,000 Amazon Prime annual subscriptions to 500 customers receiving $120 from its customers for each subscription.Required TaskPrepare the appropriate journal entries that Amazon would record on January 1, 2020 and September 30, 2020 related to its subscription sales

Answered: On September 1, 2020, Amazon sells…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On September 1, 2020, Amazon sells 2,000 Amazon Prime annual subscriptions to 500 customers receiving $120 from its customers for each subscription.

Required Task

Prepare the appropriate journal entries that Amazon would record on January 1, 2020 and September 30, 2020 related to its subscription sales

Expert Solution

Step 1

When subscriptions are received in advance, they need to be debited as unearned subscription. Only the subscription which have been earned during the month need to be recorded as income for the month.

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