Problem 1-24 (AICPA Adapted)

Anette Video Company sells 1- and 2-year subscriptions for the video-of-the-month
business.

Subscriptions are collected in advance and credited to sales. An analysis of the recorded
sales activity revealed the following:
2020 2021
Sales 420,000 500,000
Less cancelations Net sales 20,000 30,000
Net Sales 400,000 470.000

Subscription expirations:
2020 120,000
2021 155,000 130,000
2022 125,000 200,000
2023 _______ 140,000
400,000 470,000

1. On December 31, 2021, what amount should be reported as unearned subscription

revenue?
a. 495,000 b. 470,000 c. 465,000 d. 340,000

2. What amount should be reported as subscription revenue for 2021?

a. 175,000 b. 305,000 c. 285,000 d. 250,000

Problem 1-25 (AICPA Adapted)

Farr Company sells products with reusable and expensive each containers. The customer
is charged container delivered and receives a refund for each contains returned within two
years after the year of delivery.

Containers held by customers on January 1, 2020 from deliveries in:

2018 75,000
2019 215,000 290,000

Containers delivered in 2020 390,000

Containers returned in 2020 from deliveries in:

2018 45,000
2019 125,000
 2020 143,000 313,000

What is the liability for deposits on December 31, 2020?

a. 247,000 b. 292,000 c. 337,000 d. 367,000