Question

Calculate earned revenues  Kirkland Theater sells season tickets for six events at a price of $240. In pricing the tickets, the planners assigned the leadoff event a value of $60 because the program was an expensive symphony orchestra. The last five events were priced equally; 1,800 season tickets were sold for the 2019 season. Required: Calculate the theater’s earned revenue after the first three events have been presented. About 95% of the season ticket holders attended the first event. Subsequent events were attended by about 80% of the season ticket holders. To what extent, if any, should the attendance data impact revenue recognition? Explain your answer.

Answer 1

Answer

Price for First ticket = $ 60

Price for remaining 5 tickets = $ 240 - $ 60 = $ 180

Price for each of the 5 tickets = $ 180/5 = $ 36

Revenues for first 3 events = ($ 60 + $ 36 + $ 36)*1,800

= $ 132 * 1,800

= $ 237,600

The attendance should not affect the revenue recognition. This is because the tickets were sold prior to event and the company received the amount for those wo were absent.

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