Question

Season tickets for the Panthers are priced at $320 and include 16 games. Revenue is recognized after each game is played. When the season began, the amount credited to Unearned Ticket Revenue was $1,728,000. By the end of October, $1,188,000 of the Unearned Ticket Revenue had been recorded as earned.

a) How many season tickets did the Panthers sell?
b) How many home games had the Panthers played by the end of October?
c) Prepare the entry for the initial recording of the Unearned Ticket Revenue.
d) Prepare the entry to recognize the revenue after the first home game had been played.

Answer 1

a) Tickets sold 5400

b) Games played 59400

c) Dr Cr

Cash $1,728,000

Unearned revenue $1,728,000

Dr Cr

d) Unearned revenue $20

Ticket revenue $20

Step-by-step explanation:

a) Unearned ticket revenue/ticket price = $1,728,000/$320 = 5400

b) Average price per game = Ticket price/games = $320/16 = $20 per game Unearned ticket revenue recorded as earned/average price per game = $1,188,000/$20 = 59400

c) Unearned revenue is the liability for the recipient of the payment so initial entry is debit to cash account and credit to unearned revenue account

d) When unearned revenue is recognized it is debited ( reduction in liability is debited) and revenue account is credited.