Question

Indigo Travel, Inc. sells tickets for a dude ranch excursion at Weeping T Ranch to Big City Corporation employees. The total package price to Big City Corporation employees is $144,000. Indigo Travel Inc. receives a commission of 8% of the total price. Indigo Travel Inc. therefore remits $132,480 to Weeping T Ranch. Prepare the journal entry to record the remittance and revenue recognized by Indigo Travel, Inc. on this transaction. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Explanation:

The Journal Entry is given below:-

Accounts Payable Weeping T Ranch Dr,          $144,000

               To Commission Revenue                   $11,520

                                                                          ($144,000 × 8%)

                To Cash Account                                $132,480

(Being remittance and revenue recognized is recorded)