Weaver Company sells magazine subscriptions for a 1-year, 2-year, or 3-year period. Cash receipts from subscribers are credited to magazine subscriptions collected in advance, and this account had a balance of $1,700,000 at December 31, year 1. Information for the year ended December 31, year 2, is as follows:
Cash receipts from subscribers $2,100,000
Magazine subscriptions revenue (credited at 12/31/42) 1,500,000
Required:
a. In its December 31, year 2 balance sheet, what amount should Weaver report as the balance for magazine subscriptions collected in advance?
O $1,400,000
O $2,100,000
O $2,300,000
O $1,900,000

O $2,300,000

Explanation:

When fees are received in advance but yet to be earned, a debit is posted to cash account and a credit to magazine subscriptions collected in advance account.

When revenue is earned credit Magazine subscriptions revenue, and debit magazine subscriptions collected in advance.

Given that the magazine subscriptions collected in advance account had a balance of $1,700,000 at December 31, year 1 and cash receipt in year 2 from subscribers was $2,100,000 while the revenue generated in that year was $1,500,000

The balance for magazine subscriptions collected in advance

= $1,700,000 + $2,100,000 - $1,500,000

= $2,300,000