Question

Tuition and fees for Northern University were assessed at $22,000,000. $ 1,600,000 of the amount due from students was later reduced by need based scholarships. Graduate assistantships and work-study stipends reduced the amounts collectible from student by an additional $ 1,000,000.

What is the journal entry to record tuition revenue?

Answer 1

To record tuition revenue for Northern University, an initial debit to Accounts Receivable and a credit to Tuition and Fees Revenue are made for $22,000,000. Reductions due to scholarships and assistantships of $2,600,000 are also recorded, resulting in a net tuition revenue of $19,400,000.

Step-by-step explanation:

To record the tuition revenue for Northern University, we need to consider both the initial amount of tuition and fees assessed as well as the reductions due to scholarships and assistantships. Initially, $22,000,000 was assessed in tuition and fees. Then, need-based scholarships reduced the amount by $1,600,000, and graduate assistantships and work-study stipends further reduced it by $1,000,000.

The journal entry to record the tuition revenue, after accounting for these reductions, is as follows:

• Debit: Accounts Receivable $22,000,000
• Credit: Tuition and Fees Revenue $22,000,000

Next, we record the reductions due to scholarships and assistantships/stipends:

• Debit: Scholarship Allowance $1,600,000
• Debit: Assistantship/Stipend Allowance $1,000,000
• Credit: Accounts Receivable $2,600,000

The net revenue recognized would be the original $22,000,000 less the reductions, which equals $19,400,000.