Sarasota Marina has 300 available slips that rent for $900 per season. Payments

Question

Sarasota Marina has 300 available slips that rent for $900 per season. Payments must be made in full by the start of the boating season, April 1, 2018. The boating season ends October 31, and the marina has a December 31 year-end. Slips for future seasons may be reserved if paid for by December 31, 2018. Under a new policy, if payment for 2019 season slips is made by December 31, 2018, a 6% discount is allowed. If payment for 2020 season slips is made by December 31, 2018, renters get a 18% discount (this promotion hopefully will provide cash flow for major dock repairs).

On December 31, 2017, all 300 slips for the 2018 season were rented at full price. On December 31, 2018, 160 slips were reserved and paid for the 2019 boating season, and 71 slips were reserved and paid for the 2020 boating season.

(a) Prepare the appropriate journal entries for December 31, 2017, and December 31, 2018.

Date Account Titles and Explanation Debit Credit Dec. 31, 2017 cash 270000 Unearned Rent Revenue 270000 No Entry No Entry (To record 2018 revenue.) 253800 Unearned Rent Revenue 253800 To record 2019 revenue.) cash 52398 Unearned Rent Revenue 52398 (To record 2020 revenue.)

Explanation / Answer

Journal Entries for 31st dec 2017

Cash A/C Dr. 270000

To unearned rent revenue A/C 270000

(Being 300 slips rent for 900)

Journal entries for 2018

Cash A/c Dr 62,100

To rent A/c 62,100

(Being 69 slips were rented in 2018 )

Cash A/C Dr .1,35,360

To unearned revenue rent A/C 1,35,360

( Being 160 slip is reserved for 2019- 160×900=1,44,000-6%=1,35,360)

Cash A/C Dr. - 52,398

To unearned rent revenue- 52,398

( Being 71 slip is reserved for 2020- 71×900=63900-18%=52,398)

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