Question

Ski West, Inc., operates a downhill ski area near Lake Tahoe, California. An all-day adult lift ticket can be purchased for $75. 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, 2021, Jake Lawson purchased a season pass for $405. Required: When should Ski West recognize revenue from the sale of its season passes? Prepare the appropriate journal entries that Ski West would record on November 6 and December 31.

What will be included in the Ski West 2021 income statement and balance sheet related to the sale of the season pass to Jake Lawson?

Answer 1

1
Ski West recognize revenue Equally throughout the season
2
Date	General Journal	Debit	Credit
November 06,2021	Cash	405
	Deferred revenue		405
December 31,2021	Deferred revenue	81		=405*1/5
	Service revenue		81
3
Amount	81	included in	revenue
Amount	324	remaining balance in	deferred revenue