Question

Fugazi City College sold season tickets for the 2015 football season for $240,000. A total of 8 games will be played during September, October and November. In September, three games were played. The adjusting journal entry at September 30
a. will include a debit to Ticket Revenue and a credit to Unearned Ticket Revenue for $80,000.
b. is not required. No adjusting entries will be made until the end of the season in November.
c. will include a debit to Cash and a credit to Ticket Revenue for $60,000.
d. will include a debit to Unearned Ticket Revenue and a credit to Ticket Revenue for $90,000.

Answer 1

Answer:

d. will include a debit to Unearned Ticket Revenue and a credit to Ticket Revenue for $90,000.

Explanation:

For tickets sold in advance, revenue is not recognized on those tickets until the matches have been played. As such, when payment was received for the tickets, the required entries were Debit Cash account and credit Deferred or unearned revenue.

When the matches are played, revenue is proportionately earned and recorded by crediting revenue and debiting deferred or unearned revenue.

For the 3 games played in September, revenue earned

= 3/8 × $240,000

= $90,000