Season tickets for the Longhorns are priced at $230 and include 20 games. Revenu

Question

Season tickets for the Longhorns are priced at $230 and include 20 games. Revenue is recognized after each game is played. When the season began, the amount credited to Unearned Revenue from season tickets was $1,265,000. By the end of October, $759,000 of the Unearned Revenue from season tickets had been recorded as earned.

(a) How many season tickets did the Longhorns sell?

tickets


(b) How many home games had the Longhorns played by the end of October?

games


(c) Prepare the entry for the initial recording of the Unearned Season Ticket Revenue.



Date Account/Description Debit Credit
Initial Season ticket revenueUnearned season ticket revenueInterest expenseCashAccounts receivable
Unearned season ticket revenueCashAccounts receivableSeason ticket revenueInterest expense


(d) Prepare the entry to recognize the revenue after the first home game had been played.



Date Account/Description Debit Credit
1st Game Unearned season ticket revenueCashAccounts receivableSeason ticket revenueInterest expense
Interest expenseAccounts receivableCashSeason ticket revenueUnearned season ticket revenue

Explanation / Answer

Assuming all revenues are from season ticket holders... season tickets sold: $1,265,000 / $230 = 5,500 price per game = $230 / 20 = $11.50 revenue per game from season ticket holders = $11.50 * 5,500 = $63,250 end of Oct earned revenue $759,000 / earnings per game $63,250 = 12 games played to date ...not a GL guru...?original cash is offset by unearned revenue liability account(no revenue is recognized until they play), then after first game the liability is reduced by $63,250 and that money is taken into earned revenue (sales)..

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