A company receives $6,500 for two season tickets sold on September 1. If $2,500 is earned by December 31, the adjusting entry made at that time is a debit to Cash of $2,500, and a credit to Ticket Revenue of $2,500.

Question

Quizplus · Accepted Answer

The correct adjusting entry should be a debit to Unearned Revenue (or a similar liability account) for $2,500 and a credit to Ticket Revenue for $2,500, recognizing the portion of the ticket revenue that has been earned by December 31. Cash is not affected by this adjusting entry since the cash was received at the time of the initial transaction.

A Company Receives $6,500 for Two Season Tickets Sold on September