ignment Questio IThe following information applies to the questions displayed be
ID: 2411157 • Letter: I
Question
ignment Questio IThe following information applies to the questions displayed below) A local theater company sells 1,300 seeson tucket packages at a price of $270 per package. The first show in the ten-show season starts this week (a) The sale of the season tickets before the first show (b) The revenue earned after putting on the first show value: 1.00 points 2. Prepare the journal entries related for the above transactions. (If no entry is required for a transactionlevent, select"No Journal Entry Required" in the first account field.) View transaction list A local theater company sells 1,300 season ticket packages at a price of $270 per package. Record the revenue before the first show. 1 of $270 2 A local theater company sells 1,300 season ticket packages at a price of $270 per package. Record the revenue after the first show. CreditExplanation / Answer
Answer
Tickets are sold before the actual show, and payment has been received in Cash.
This cash is not actual revenue earned because services are not yet rendered (first show has not been put on yet).
The amount received will be treated as “Unearned Revenue” until the show is put on.
Journal Entry
Accounts title
Debit
Credit
Cash
$ 3,51,000.00
Unearned revenue
$ 3,51,000.00
(Cash received for services to be provided)
When the first show has taken place, the earlier recorded “Unearned Revenue” will now have to recorded as “Revenues Earmed”.
Journal Entry
Accounts title
Debit
Credit
Unearned Revenues
$ 3,51,000.00
Revenues Earned (or Service Revenue)
$ 3,51,000.00
(Unearned revenues now earned)
Accounts title
Debit
Credit
Cash
$ 3,51,000.00
Unearned revenue
$ 3,51,000.00
(Cash received for services to be provided)
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