S3-12. (Learning Objectives 1, 3: Relating accrual accounting to cash flows; adjusting the accounts) Write a paragraph to explain why unearned revenues are liabilities instead of revenues. In your explanation, use the following example: The Asahi Shimbun, a Japanese national newspaper, collects cash from subscribers in advance and later delivers newspapers to subscribers over a one-year period. Explain what happens to the unearned revenue over the course of a year as The Asahi Shimbun delivers papers to subscribers. Into what account does the earned subscription revenue go as The Asahi Shimbun delivers papers? Give the journal entries that The Asahi Shimbun would make to

(a) collect ¥5 million of subscription revenue in advance, and

(b) record earning ¥5 million of subscription revenue. Include an explanation for each entry, as illustrated in the chapter.