Question 9 The Sunland, Inc. sold 9,120 season tickets at $2,100 each. By December 31, 2017, 16 of the 40 home games had been played. What amount should be reported as a current liability at December 31, 2017? Current liability $ 5472

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Kali Martin

19 August, 07:48

Question 9 The Sunland, Inc. sold 9,120 season tickets at $2,100 each. By December 31, 2017, 16 of the 40 home games had been played. What amount should be reported as a current liability at December 31, 2017? Current liability $ 5472

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Answers (1)

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Chana Reed · Answer 1

The current liability at December 31st 2017 is $ 11,491,200.00

Explanation:

The total amount realized from the sale of tickets is $19,152,000.00

($2100*9120) which is a revenue received in advance, a current liability, however only 16 out of 40 games have been played at 31st December 2017, which implies that Sunland Inc is now entitled to recognize revenue for 16 games.

The revenue for 16 games is computed below:

$19,152,000.00 * 16/40=$ 7,660,800.00

The necessary entries for this is shown below:

Dr Deferred revenue $7,660,800.00

Cr Sales revenue $7,660,800.00

This leaves a balance of $ 11,491,200.00 ($19,152,000.00 - $7,660,800.00) in the deferred revenue account, by implication the current liability at December 31st 2017 is $ 11,491,200.00