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The Martinez, Inc. sold 10,940 season tickets at $2,180 each. By December 31, 2017, 16 of the 40 home games had been played. What amount should be reported as a current liability at December 31, 2017?

User Jamelle
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Answer:

To find the amount that should be reported as a current liability at December 31, 2017, we need to determine how much of the ticket revenue has been earned as of that date.

Since 16 of the 40 home games had been played by December 31, 2017, the portion of the season that has been completed is 16/40 or 2/5. Therefore, the amount of revenue that has been earned as of that date is 2/5 of the total revenue:

10,940 season tickets x $2,180 per ticket = $23,879,200 total revenue

$23,879,200 x 2/5 = $9,551,680 revenue earned as of December 31, 2017

Therefore, the amount that should be reported as a current liability at December 31, 2017 is the portion of the revenue that has not yet been earned, which is:

$23,879,200 - $9,551,680 = $14,327,520

So the current liability to be reported at December 31, 2017 is $14,327,520

User Silentnuke
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