1.) Last year the Martinville Moonfish, a not-so professional minor league football team sold $61,200 worth of season tickets for all seventeen games to willing fans. The $61,200 received for tickets to games that haven't been provided yet would be considered:
1. Pre-season Revenues (included with normal sales revenue)
2. Unearned Revenues
3. Outstanding Sales
4. Contingent Liabilities.
PLEASE REFER BACK TO THE PREVIOUS QUESTION REGARDING THE MARTINVILLE MOONFISH.
2.) If the revenues from prepaid ticket sales were recognized evenly over the course of the seventeen game season, what would be the journal entry that would need to be recorded following the first game?
Item Account DEBIT CREDIT
Item 1. Cash $61,200
Accounts Receivable $61,200
Item 2. Unearned Revenues $3,600
Ticket Revenues Earned $3,600
Item 3. Cash $61,200
Ticket Revenues Earned $61,200
Item 4. Cash $4,280
Unearned Revenues $4,280
A. Item 3 is the correct entry.
B. Item 1. is the correct entry.
C. Item 2. is the correct entry.
D. Item 4 is the correct entry.
2. Unearned Revenues- Until the income is earned by means of providing goods or services, ...
The solution provides the correct answer for the Martinville Moonfish question and includes both parts.
Interpreting Financial Statement Disclosures Relating To Income Recognition
Please see attachment for question.
Summary of study question:
Deere recognizes income at the time of shipment to dealer. Provisions are made at the time of the sale. A time lag exists between recording sales and the dealer sells equipment to the customers. Deere uses the installment method for tax reporting. Deere provides financing services. Accounts and notes receivable appear net of unearned finance income. Deere recognizes this income as finance revenue over the period that the dealer and customer notes are outstanding.
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