Question

Ski West, Inc., operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $60. Adult customers also can purchase a season pass that entitles the pass holder to ski any day during the season, which typically runs from December 1 through April 30. Ski West expects its season pass holders to use their passes equally throughout the season. The company’s fiscal year ends on December 31. On November 6, 2018, Jake Lawson purchased a season pass for $330.

Required: 1. When should Ski West recognize revenue from the sale of its season passes?

2. Prepare the appropriate journal entries that Ski West would record on November 6 and December 31.

3. What will be included in the Ski West 2018 income statement and balance sheet related to the sale of the season pass to Jake Lawson?

Answer 1

Answer:
1)
When Should Ski west recognize revenue From the Sale of its season Passes	Equally throughout the season
2)
Date	Account Title and Explanation	Debit (in $)	Credit (in $)
06-Nov-18	Cash	$330
	Deferred revenue		$330
	(To record the Cash Collection)
31-Dec-18	Deferred revenue	$66
	Service revenue               ($330 / 5months)		$66
	(To record the Services Performed)
3)
In Ski west Inc income statement, Amount of $66 is included as revenue
In Ski west Inc balance Sheet , Amount $264 ($330 (-)$66) is included as deferred revenue