1) Athletics Illustrated Magazine began publishing in 2012. At the beginning of that year, the company collected $5,000 in advance subscription payments from customers. At December 31, 2012, $1,200 of the subscription payments had still not been earned. After the adjusting entries are recorded and posted, the balances in Unearned Subscriptions Revenue and Subscriptions Revenue should be, respectively,

a. 1,200 and $5,000

b. $1,200 and $3,800

c. $5,000 and $5,000 d

. $1,200 and $0

e. none of the above

2) Highland Company's current ratio is 0.6 to 1. The company is negotiating a loan, and company management understands that a better current ratio will reduce the company's cost of borrowing (interest rate). Which of the following transactions will improve (increase) Highland Company's current ratio?

a. making a payment on long-term debt

b. using cash to pay current liabilities

c. purchasing inventory on account

d. collecting some of the company's accounts receivable

e. none of the above