Answer:
October 31 Cash $5,000,000 Dr
Unearned ticket Revenue $5,000,000 Cr
November 5 Unearned ticket revenue $1,250,000 Dr
Ticket Revenue $1,250,000 Cr
Explanation:
The ticket revenue is earned in advance and is not earned yet. Thus, the entry to record the receipt of ticket revenue in advance will increase the cash and cause a debit to the cash account of the total amount of revenue received. The concerts are yet to be done so it is unearned revenue and is a liability for the company. Thus, there will be a credit to unearned ticket revenue for the amount of cash received.
When the first concert is done, one fourth of the revenue is earned so it will cause a debit to unearned service revenue for 5000000 / 4 = 1250000 and a credit to the service revenue of 1250000
Answer:
October 31:
Dr Cash $5,000,000
Cr Unearned revenue $5,000,000
On November 5:
Dr Unearned revenue $1,250,000
Cr Earned revenue $1,250,000
Explanation:
The $5,000,000 advance ticket sales increases cash inflows by $5,000,000 hence a debit of $5,000,000 is posted to cash account and a corresponding credited is shown in the unearned revenue account as a liability.
On November 5, the one-fourth of the unearned can be recognized by debiting unearned revenue with $1,250,000($5,000,000/4) and credit to earned revenue of $1,250,000
