Instructions Horse Country Living publishes a monthly magazine for which a 12-month subscription costs $30. All subscriptions require payment of the full $30 in advance. On August 1, the balance in the Subscriptions Received in Advance account was $40,500. During the month of August, the company sold 900 yearly subscriptions. After the adjusting entry at the end of August, the balance in the Subscriptions Received in Advance account is $60,000. Required: 1. Prepare the journal entry to record the sale of the 900 yearly subscriptions during the month of August. 2. Prepare the adjusting Joumal entry on August 31. 3. Assume that the accountant made the correct entry during August to record the sale of the 900 subscriptions but forgot to make the adjusting entry on August 31. Would net income for August be overstated or understated? Chart of Accounts ASSETS REVENUE 111 Cash 411 Subscription Revenue 121 Accounts Receivable 141 Inventory EXPENSES entry on August 31. Would net income for August be overstated or understated? 500 Cost of Goods Sold 152 Prepaid Insurance 154 Office Supplies on Hand 521 Salaries and Wages Expense 174 Equipment 532 Utilities Expense 179 Accumulated Depreciation 533 Insurance Expense 534 Rent Expense LIABILITIES 211 Accounts Payable 231 Salaries and Wages Payable 235 Notes Payable 250 Subscriptions Received in Advance 261 Income Taxes Payable 537 Office Supplies Expense 541 Depreciation Expense 551 Advertising Expense 559 Miscellaneous Expenses 810 Interest Expense 910 Income Tax Expense EQUITY 311 Capital Stock 331 Retained Earnings General Journal 1. Prepare the journal entry with the impact on the financial statements to record the sale of the 900 yearly subscriptions during the month of August. General Joumal Instructions PAGE 1 IMPACT ON FINANCIAL STATEMENTS GENERAL JOURNAL BALANCE SHEET INCOME STATEMENT DATE ACCOUNT TITLE POST. REF DEBIT CREDIT ASSETS LIABILITIES EQUITY REVENUE EXPENSES NET INCOME 2 2. Prepare the adjusting journal entry with the impact on the financial statements on August 31. PAGE 1 IMPACT ON FINANCIAL STATEMENTS GENERAL JOURNAL BALANCE SHEET INCOME STATEMENT DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT ASSETS LIABILITIES EQUITY REVENUE EXPENSES NET INCOME Adjusting Entries 2 3 Final Question 3. Assume that the accountant made the correct entry during August to record the sale of the 900 subscriptions but forgot to make the adjusting entry on August 31. Would net income for August be overstated or understated