I am not sure how you are supposed to do journal entries with the information gi
ID: 2470363 • Letter: I
Question
I am not sure how you are supposed to do journal entries with the information given and was hoping someone could assist me with this problem.
Your goal is to forecast an income statement, balance sheet and statement of cash flows for Manchester United (ManU) for 2013. ManU has three primary lines of revenue – commercial (merchandise sales), broadcasting and matchday revenue (tickets to games). Assume that ManU recognizes revenue from ticket sales and broadcasting rights when the associated matches are played, and recognizes revenues from merchandise sales when the merchandise is sold.When forecasting the balance sheet, assume that other non-current assets, other current liabilities and non-current liabilities will remain unchanged from 2012 to 2013.
1.
Matchday Revenue (Ticket Sales):
You forecast that ManU will earn £96,321 from tickets to games that are played during the 2013 season. Assume that ManU will sell some of the 2013 seats through game-day sales (£30,844) and that the remainder (£65,477) will be for season tickets sold in 2012 covering the 2013 season (“deferred revenue” on the balance sheet). Assume further that ManU will sell (for cash) £48,976 of tickets during 2013 for the 2014 season.
Explanation / Answer
Income - 2013
Deferred revenue a/c DR 65,477
Sales a/c CR 65,477
Cash a/c DR 30,844
Sales a/c CR 30,844
Income -2014
Deferred revenue a/c DR 48,976
Sales a/c CR 48,976
Cash flow:
In 2012
Cash a/c DR 65,477
Deferred revenue a/c CR 65,477
In 2013
Cash a/c DR 48,976
Deferred revenue a/c CR 48,976
Balance sheet 2012
Current assets in 2012
Deffered revenue 65,477
Balance sheet 2013
Current assets in 2013
Deffered revenue 48,976
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