1. If I am the controller of Madison Square Garden and I receive $10,000 in tickets sales today for a Beyoncé Concert that will take place in 6 months. How do we record the cash?

2. a. Why do major companies use accrual accounting?
b. Do you think that the owner of the food stand on 45th and Fifth Avenue used accrual accounting or the other type of accounting?
c. What is the other type of accounting?

3. What distinguishes a merchandising business from a service business? Give some examples.

4. Is a restaurant a service business or merchant, or is it an example of both?

Homework Answers

Answer #1


Journal Entry

Cash a/c Dr $ 10,000

To Unearned revenue a/c $ 10,000

(Being amount received on sales of ticket)

Reason : Amount is received from customers in 6 month advance for sale of tickets to customers. Service will be rendered after 6 months i.e., concert will be held after 6 months. Revenue recognition principle requires revenue to be accounted in books of accounts when product is delivered to customer or service is rendered to customers. Otherwise revenue should be transferred to unearned revenue and accounted in period in which revenue recognition criteria is met. So in above case cash will be transferred to unearned revenue account.

Note: As per answering rules only one question is answered. If you want solution of other questions, please upload them separately.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question