The Carluccis decided to open a resort. In the first month of operation they collected cash and credit card receipts of $1,612.50. All rooms rent out at $75 a night and during the month they had 19 room rentals. In addition to the 19 rentals, they received non-refundable deposits of $37.50 each on another five nights of rentals. Two of those deposits related to the current month and the people failed to show up. The Carluccis did not refund the deposits for these two customers. The remaining three deposits are for future stays. The appropriate amount for them to recognize as revenue for their first month is
A) $1,425.
B) $1,500.
C) $1,800.
D) $1,575.

Question

Quizplus · Accepted Answer

The Carluccis should recognize revenue for the 19 room rentals at $75 each, totaling $1,425. Additionally, they should recognize the non-refundable deposits for the two no-shows, which is $37.50 each, totaling $75. Therefore, the total revenue recognized is $1,425 + $75 = $1,500.

The Carluccis Decided to Open a Resort