Question

Ticketsales, Inc., receives $7,720,000 cash in advance ticket sales for a four-date tour of Bon Jovi. Record the advance ticket sales on October 31. Record the revenue earned for the first concert date of November 5, assuming it represents one-fourth of the advance ticket sales. Ticketsales, Inc. initially records prepaid and unearned items in balance sheet accounts.

View transaction list Journal entry worksheet Record the concert revenues earned. Note: Enter debits before credits. Debit Credit General Journal Date Nov 05

Answer 1

When revenue has been received but the service has not been rendered, the revenue will not be recognized and will instead be treated as a liability called unearned revenue.

Date Account Title Debit Credit

Oct. 31 Cash $7,720,000

Unearned Ticket revenue $7,720,000

Date Account Title Debit Credit

Nov. 5 Unearned Ticket Revenue $1,930,000

Ticket Revenue $1,930,000

Working

Ticket revenue = 1/4 * 7,720,000

= $1,930,000