You work in a company that has begun selling annual subscriptions to its new online magazine. During December, the company sold the first subscriptions, receiving $600,000, which represents one-fifth of its revenues from all sources for the year. The entire amount has been collected in cash. As the end of the the year approaches, you notice that the company recorded the entire $600,000 to revenue and there is no plan to make an adjusting entry.

Draft a memo around two paragraphs in length to your supervisor, which explains the following:

• The accounting error that has been made
• The effect this error will have on the financial statements dated at the end of December
• The problems that might result
• The importance of fixing the error and what needs to be done to fix the error

Make sure to include proper grammar, spelling, etc.