The Present Times Newspaper Company showed a $14,000 liability in its 2020 balance sheet for subscription revenue received in advance. During 2021, $60,000 was received from customers for subscriptions and the 2021 income statement reported subscription revenue of $25,000. What is the liability amount for deferred subscription revenue that will appear in the 2021 balance sheet?

$49,000

Explanation:

When an amount is received in advance for a service yet to be rendered or  product yet to be delivered, an asset is recorded in form of cash and a liability in form of deferred or unearned revenue. As revenue is earned, it reduces the balance in the deferred revenue account (or subscription revenue received in advance).

Given that the Present Times Newspaper Company showed a $14,000 liability in its 2020 balance sheet for subscription revenue received in advance and During 2021, $60,000 was received from customers for subscriptions and the 2021 income statement reported subscription revenue of $25,000,

Closing balance in the subscription revenue received in advance account

= $14,000 + $60,000 - $25,000

= $49,000

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