Questions: Ticketsales, Incorporated, receives 5,520,000 cash in advance ticket sales for a four-date tour of Bon Jovi. Record the advance ticket sales on October 31. Record the revenue earned for the first concert date of November 5, assuming it represents one-fourth of the advance ticket sales. Ticketsales, Incorporated initially records prepaid and unearned items in balance sheet accounts. View transaction list Journal entry worksheet 1 2 Record the cash receipt in advance of concerts. Note: Enter debits before credits. Date General Journal Debit Credit October 31

Ticketsales, Incorporated, receives 5,520,000 cash in advance ticket sales for a four-date tour of Bon Jovi. Record the advance ticket sales on October 31. Record the revenue earned for the first concert date of November 5, assuming it represents one-fourth of the advance ticket sales. Ticketsales, Incorporated initially records prepaid and unearned items in balance sheet accounts.

View transaction list

Journal entry worksheet
1
2

Record the cash receipt in advance of concerts.

Note: Enter debits before credits.

Date General Journal Debit Credit
October 31

Transcript text: Ticketsales, Incorporated, receives $\$ 5,520,000$ cash in advance ticket sales for a four-date tour of Bon Jovi. Record the advance ticket sales on October 31. Record the revenue earned for the first concert date of November 5, assuming it represents one-fourth of the advance ticket sales. Ticketsales, Incorporated initially records prepaid and unearned items in balance sheet accounts. View transaction list Journal entry worksheet 1 2 Record the cash receipt in advance of concerts. Note: Enter debits before credits. \begin{tabular}{|c|l|l|l|} \hline Date & General Journal & Debit & Credit \\ \hline October 31 & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline & & & \\ \hline \end{tabular}

Solution

Solution Steps

To solve this problem, we need to record two journal entries. First, we record the cash received in advance as a liability because the service (concert) has not yet been provided. This is recorded as "Unearned Revenue." Second, after the first concert, we recognize one-fourth of the total revenue as "Earned Revenue" and reduce the "Unearned Revenue" by the same amount.

Step 1: Record Cash Receipt in Advance

Ticketsales, Incorporated receives $\$5,520,000$ in advance for a four-date tour. This amount is recorded as a liability under "Unearned Revenue" because the service (concert) has not yet been provided. The journal entry for October 31 is:

Debit "Cash" for $\$5,520,000$
Credit "Unearned Revenue" for $\$5,520,000$

Step 2: Calculate Revenue Earned for First Concert

The total advance sales are $\$5,520,000$, and the revenue for each concert is one-fourth of this amount. Therefore, the revenue earned for the first concert on November 5 is:

\[ \text{Revenue per concert} = \frac{5,520,000}{4} = 1,380,000 \]

Step 3: Record Revenue Earned for First Concert

After the first concert, we recognize $\$1,380,000$ as "Earned Revenue" and reduce the "Unearned Revenue" by the same amount. The journal entry for November 5 is:

Debit "Unearned Revenue" for $\$1,380,000$
Credit "Revenue" for $\$1,380,000$

Final Answer

The journal entries are as follows:

October 31:
- Debit: Cash $\$5,520,000$
- Credit: Unearned Revenue $\$5,520,000$
November 5:
- Debit: Unearned Revenue $\$1,380,000$
- Credit: Revenue $\$1,380,000$

\[ \boxed{ \begin{array}{|c|c|c|c|} \hline \text{Date} & \text{Account} & \text{Debit} & \text{Credit} \\ \hline \text{October 31} & \text{Cash} & 5,520,000 & 0 \\ \hline \text{October 31} & \text{Unearned Revenue} & 0 & 5,520,000 \\ \hline \text{November 5} & \text{Unearned Revenue} & 1,380,000 & 0 \\ \hline \text{November 5} & \text{Revenue} & 0 & 1,380,000 \\ \hline \end{array} } \]

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