Calculate earned revenues Kirkland Theater sells season tickets for six events a

ID: 2493016 • Letter: C

Question

Calculate earned revenues Kirkland Theater sells season tickets for six events at a price of $180. In pricing the tickets, the planners assigned the leadoff event a value of $45 because the program was an expensive symphony orchestra. The last five events were priced equally; 1,200 season tickets were sold for the 2010 season.

a. Calculate the theater’s earned revenue after the first three events have been pre- sented.

b. About 95% of the season ticket holders attended the first event. Subsequent events were attended by about 80% of the season ticket holders. To what extent, if any, should the attendance data impact revenue recognition? Explain your answer.

Explanation / Answer

Solution :

selling Price

180

no of tickets

1200

total revenue

216000

a) theater’s earned revenue after the first three events have been pre- sented (216000*3/6)

108000

b)the attendance data does not impact revenue recognition since the ticket is already being sold and revenue is defered till event is presented so it has nothing to do with attendance