A local theater company sells 1,450 season ticket packages at a price of $260 pe

Question

A local theater company sells 1,450 season ticket packages at a price of $260 per package. The first show in the ten-show season starts this week.

Indicate the effects of the amounts for the above transactions. (Enter any decreases to account balances with a minus sign.)

Prepare the journal entries related for the above transactions.

A local theater company sells 1,450 season ticket packages at a price of $260 per package. Record the revenue before the first show.

A local theater company sells 1,450 season ticket packages at a price of $260 per package. Record the revenue after the first show.

(a) The sale of the season tickets before the first show. (b) The revenue earned after putting on the first show.

Explanation / Answer

Answer:

(a) A local theater company sells 1,450 season ticket packages at a price of $260 per package. Record the revenue before the first show.

Account Titles and Explanation

Debit

Credit

Cash A/c Dr.

(1,450 x $260)

$377,000

    To Unearned Revenue A/c

$377,000

(Unearned Revenue recorded)

Since company has not earned the revenue, the amount received towards the sale of ticket package is recorded as Unearned Revenue (Advance received towards show)

Once the show is completed, it means the economic event completed / done, the company will record the Revenue from Unearned Revenue Ac/.

Account Titles and Explanation

Debit

Credit

Unearned Revenue A/c

$377,000

    To Revenue A/c

$377,000

(Being the revenue towards the show ticket recorded)

Account Titles and Explanation

Debit

Credit

Cash A/c Dr.

(1,450 x $260)

$377,000

    To Unearned Revenue A/c

$377,000

(Unearned Revenue recorded)

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