Question

On December 3, the Celtics sold a six-game pack of advance tickets for $3,210 cash On December 20, the Celtics played the first game of the six game pack (this represented one-sixth of the advance ticket sales). Record the entry for the December 20 transaction: Multiple Choice

a. Debit Prepaid Subscriptions $535, credit Ticket Revenue $535
b. Debit Unearned Revenue $535 credit Ticket Revenue $535.
c. Debit Cash $535, credit Ticket Revenue $535
d. Debit Uneamed Revenue $535 credit Cash $535.
e. Debit Prepaid Tickets $535. credit Unearned Revenue $535

Answer 1

The correct answer is b.)The correct entry for the December 20 transaction would be to debit Unearned Revenue $535 and credit Ticket Revenue $535.

Step-by-step explanation:

The correct entry for the December 20 transaction would be:

Debit Unearned Revenue $535

Credit Ticket Revenue $535

Since the Celtics sold a six-game pack of advance tickets on December 3, the revenue from those ticket sales is considered unearned until the games are actually played. On December 20, when the first game of the six-game pack is played, $535 worth of revenue from the ticket sales becomes earned revenue. Therefore, the unearned revenue account is debited and the ticket revenue account is credited for the same amount.

Answer 2

The correct journal entry for recognizing the revenue from the first game of the six-game pack is Debit Unearned Revenue and Credit Ticket Revenue by $535.option b is correct answer.

Step-by-step explanation:

On December 3, the Celtics sold a six-game pack of advance tickets for $3,210 cash, which divides into $535 for each game when split equally. On December 20, the Celtics played the first game of the six-game pack, which was one-sixth of the advance ticket sales.

This scenario involves recognizing earned revenue from the advance payment received earlier. The correct accounting entry for this transaction on December 20 would be to debit Unearned Revenue and credit Ticket Revenue in the amount corresponding to one game out of the six-game pack.

The appropriate journal entry is b. Debit Unearned Revenue $535, credit Ticket Revenue $535. This moves the revenue from a liability account (Unearned Revenue) where it was recorded when the tickets were initially sold, to an income statement account (Ticket Revenue) to recognize the revenue now that the service (the game) has been provided.