Question

Ticketsales, Inc., receives $7,760,000 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.

Answer 1

The Journal entries are as follows:

(i) On October 31,

Cash A/c Dr. $7,760,000

To Unearned ticket revenue A/c $7,760,000

(To record the Unearned ticket revenue)

(ii) On November 5,

Unearned ticket revenue A/c Dr. $1,940,000

To Earned ticket revenue $1,940,000

(To record the one-fourth of the advance ticket sales)

Working notes:

Unearned ticket revenue:

= $7,760,000 × (1/4)

= $1,940,000