Question

Part one:

A local theater company sells 1,550 season ticket packages at a price of $320 per package. The first show in the 10-show season starts this week.

(a) The sale of the season tickets before the first show.

1. The revenue from fulfilling the performance obligation by putting on the first show.

2. Prepare the journal entries related for the above transactions

A) A local theater company sells 1,550 season ticket packages at a price of $320 per package. Record the sale of the season tickets before the first show.

B) A local theater company sells 1,550 season ticket packages at a price of $320 per package. Record the revenue after the first show.

Part two:

A local theater company sells 1,550 season ticket packages at a price of $320 per package. The first show in the 10-show season starts this week.

(a) The sale of the season tickets before the first show.

1. (b) The revenue from fulfilling the performance obligation by putting on the first show.

1. indicate the effects of the amounts for the above transactions. (Enter any decreases to assets, liabilities, or stockholders equity with a minus sign.)

Answer 1

Answer
Indicating the Effects of the Amount for the Transactions:
	Assets		=	Liabilities		+	Stockholders' Equity
(a)	Cash	$4,96,000	=	Unearned Revenue	$4,96,000	+	No Effect	NE
(b)	No Effect	NE	=	Unearned Revenue	$ -49,600	+	Performance Revenue	$ 49,600

Journal Entries for the Transactions:
Event	General Journal	Debit	Credit
a)	Cash	$4,96,000
	Unearned Revenue		$4,96,000
	(1,550 Shows * $320 Per Show)
	(To record the Revenue of After the First Show)
b)	Unearned Revenue	$    49,600
	Performance Revenue		$    49,600
	($496,000 * 1/10 Shows)
	(To record the Revenue after the First Show)
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