Question

Analyzing Unearned Revenue Liabilities

The Metropolitan Opera Association, Inc., was founded in 1883 and is widely regarded as one of the world's greatest opera companies. The Metropolitan's performance run from September to May, and the season may consisted of more than two dozen different operas. Many of the opera's loyal subscribers purchase tickets for the upcoming season prior to the end of the opera's fiscal year end at July 31. In its annual report, the Metropolitan recognizes a Deferred Revenue liability that is defined in their footnotes as follows. "Advance ticket sales, representing the receipt of payments for ticket sales for the net opera season, are reported as deferred revenue in the consolidated balance sheets." Ticket sales are recognized as box office revenue "on a specific performance basis."

Fiscal year ended July 31	Revenues (Box office and tours)	Deferred revenue
2017	$106,217	$51,179
2016	105,098	55,931
2015	109,142	57,361
2014	109,583	48,311

Recreate the summary journal entries to recognize ticket sales (box office and tours) for The Metropolitan Opera's fiscal year 2017 and advance sales for the fiscal year 2018 season. (Assume that advance ticket sales extend no further than the next year's opera season.)

Answer 1

Account Titles	Debit	Credit
Cash	$         101,465
Revenues		$           50,286
Deferred Revenue		$           51,179
(Collection of cash for sale of tickets)
Deferred Revenue	$           55,931
Revenues		$           55,931
(Recognized revenue earned)