Problem Set A Mad River Mountain, a downhill ski resort located outside of Colum

Question

Problem Set A Mad River Mountain, a downhill ski resort located outside of Columbus, Ohio, offers an all day lift ticket for $60. Mad River also offers an adult, season's pass for $150. The pass provides the holder with unlimited access to ski the mountain from the beginning of December until the end of April. Mad River expects their season pass holders to use the pass evenly throughout the season. Mad River sells a full set of skis for $400. The cost of the skis to Mad River is $200. Mad River offers a 60-day money back, satisfaction guarantee on their ski sales. Based on past experience, 10% of customers return their skis. Mad River's fiscal year end is December 31. It is Mad River's first year in business so beginning balances are zero. On December 2, 2016, a ski club visits the mountain to ski. The ski club purchases a season's pass and set of skis for each of its ten (10) members. Mad River agrees to bill the ski club. On January 5, 2017, one customer returns his/her skis. REQUIRED: 1 Do the journal entry for December 2, 2016. 2 Do the adjusting journal entries for December 31, 2016. 3 What will be reported on the 12/31/2016 Income Statement and Balance Sheet? 4 Do the journal entry for January 5, 2017. Problem Set A Mad River Mountain, a downhill ski resort located outside of Columbus, Ohio, offers an all day lift ticket for $60. Mad River also offers an adult, season's pass for $150. The pass provides the holder with unlimited access to ski the mountain from the beginning of December until the end of April. Mad River expects their season pass holders to use the pass evenly throughout the season. Mad River sells a full set of skis for $400. The cost of the skis to Mad River is $200. Mad River offers a 60-day money back, satisfaction guarantee on their ski sales. Based on past experience, 10% of customers return their skis. Mad River's fiscal year end is December 31. It is Mad River's first year in business so beginning balances are zero. On December 2, 2016, a ski club visits the mountain to ski. The ski club purchases a season's pass and set of skis for each of its ten (10) members. Mad River agrees to bill the ski club. On January 5, 2017, one customer returns his/her skis. REQUIRED: 1 Do the journal entry for December 2, 2016. 2 Do the adjusting journal entries for December 31, 2016. 3 What will be reported on the 12/31/2016 Income Statement and Balance Sheet? 4 Do the journal entry for January 5, 2017.

Explanation / Answer

Date Particulars Debit Credit 2-Dec Accounts Receivable $ 5,500.00 Revenue - Season's Pass $ 1,500.00 Revenue - Skis $ 4,000.00 31-Dec Allownace for return and sales $      400.00 Accounts Receivable $      400.00 Part 3 Income Statement (extract) Revenue $ 5,500.00 Less: Allownace for return and sales $   (400.00) $ 5,100.00 Balance Sheet (extract) Assets Accounts Receivable $ 5,500.00 Part 4 Allownace for return and sales $      400.00 Accounts Recievable $      400.00

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