A company has advance subscription sales totaling 45,000 for the upcoming year when four quarterly journals will mailed to customers When the company mails the first quarterly journal to customers, it should record: Debit Prepaid Subscriptions 33,750 credit Unearned Revenue 33,750 Debit Prepaid Subscriptions 11,250 credit Sales 11,250 Debit Cash 11,250 credit Sales 11,250 Debit Unearned Revenue 45,000 credit Cash 45,000 Debit Unearned Revenue 11,250 credit Sales 11,250

To determine the correct journal entry, let's analyze the situation step by step:<br /><br />### Key Information:<br />1. The company has received **advance subscription sales** of \( \$ 45,000 \) for the upcoming year.<br />2. These subscriptions are for **four quarterly journals**, meaning the revenue will be recognized evenly over four quarters.<br />3. When the first quarterly journal is mailed to customers, **one-fourth of the total revenue** should be recognized.<br /><br />### Accounting Principles:<br />- **Unearned Revenue**: This represents cash received in advance for services or goods that have not yet been provided. It is a liability because the company owes the service or product to the customer.<br />- **Revenue Recognition**: Revenue is recognized when the service (in this case, mailing the journal) is performed or the product is delivered.<br /><br />### Step-by-Step Solution:<br />1. Total advance subscription sales = \( \$ 45,000 \).<br />2. Since there are four quarterly journals, the revenue recognized per quarter is:<br /> \[<br /> \text{Quarterly Revenue} = \frac{\$ 45,000}{4} = \$ 11,250<br /> \]<br />3. When the first journal is mailed, \( \$ 11,250 \) of the unearned revenue is earned and should be transferred from the **Unearned Revenue** account to the **Sales (or Revenue)** account.<br /><br />### Correct Journal Entry:<br />- **Debit Unearned Revenue \( \$ 11,250 \)**: This reduces the liability since part of the obligation has been fulfilled.<br />- **Credit Sales \( \$ 11,250 \)**: This recognizes the revenue earned for the first quarter.<br /><br />### Final Answer:<br />**Debit Unearned Revenue \( \$ 11,250 \); credit Sales \( \$ 11,250 \).**