Question

National Champions University has a football stadium that seats up to 80,000 fans. Details include:
 

• Six home games each year.

• Season passes are sold for $400 each ($100 per game). All 60,000 season passes are sold over the period January through August (prior to the season). Cash is received at the time of the sale.

• The six home games consist of two in September, three in October, and one in November.

  The bar graphs show the total cash received from season pass sales and sales revenue recognized by the university each month. The line graph plots the balance of the Deferred Revenue account over the year. Answer the following questions.
   
  Required:
  1. In which month were the most season passes sold?
  2. In which month were the most games played?
  3. In which month was the most sales revenue recognized?
  4. Based on the graph, which statement best summarizes when revenue is recognized?
  5a. In July, cash collected from season pass sales was $3,200,000 (8,000 passes sold × $400 per season pass). Record the entry for the month of July for cash collected from season pass sales.
  5b. What happens to the balance of Deferred Revenue when cash is received for a season pass prior to the season?
  5c. What is the total amount of Deferred Revenue by the end of August once all 60,000 season passes are sold for $400 each?
  6a. In September, two home games were played. Record the entry related to season passes for the month of September (Hint: Two home games represent one-third of the six home games for the season).
  6b. What happens to the balance of Deferred Revenue when games are played?
  6c. What will be the balance of Deferred Revenue after the final home game is played in November?
  

Answer 1

Req 5A: Debit- Cash 3,200,000 Credit- Deferred Revenue 3,200,000 Req 6A: Debit- Deferred Revenue 8,000,000 Credit- Sales Revenue 8,000,000 One third of 24 mil is 8 mil.