Question

Ticketmaster contracts with the producer of Blue Man Group to sell tickets online. Ticketmaster charges each customer a fee of $9 per ticket and receives $22 per ticket from the producer. Ticketmaster does not take control of the ticket inventory. Average ticket price for the event is $105.
How much revenue should Ticketmaster recognize for each Blue Man Group ticket sold?
A) $9 because the $22 from the producer is similar to a negative cost of goods sold
B) $105 because the $83 is cost of goods sold paid to the Blue Man Group producer
C) $31 because both the fee from the customer and the Blue Man Group producer are earned
D) $114 because the $83 is cost of goods sold paid to the Blue Man Group producer
E) None of the above

Answer 1

Answer:

C) $31 because both the fee from the customer and the Blue Man Group producer are earned

Explanation:

The reason is that the total revenue Ticketmaster has to record each time a ticket is sold by it is $31.

As it broken down in the question, the implication is that the $31 will reported in the account of Ticketmaster in two ways as follows:

1. $9 will be received in cash and it will have to be debited to cash account.

2. $22 is an account receivable and it will have to be reported as a receivable from the Blue Man Group producers.

Therefore, the correct option is C) $31 because both the fee from the customer and the Blue Man Group producer are earned.