Country Club Center sells season memberships for $200 each.During January of 2015, 60 season memberships were sold.As of March 31, 2015, only $3,000 of season membership fees had been collected from customers.The season runs for 4 months starting May 15, 2015.Which one of the following is an amount reported on the financial statements for the period ending March 31, 2015?

Question

Quizplus · Accepted Answer

The $3,000 collected from customers is unearned membership revenue because the season has not yet started. Therefore, there is no membership revenue to recognize yet. The 60 season memberships sold for $200 each generate total potential revenue of $12,000. However, since only $3,000 has been collected, the remaining $9,000 is considered unearned membership revenue as of March 31, 2015. Accounts receivable is not the correct answer because no revenue has been earned yet, and therefore, no invoice has been sent to customers. Membership revenue is also not correct because the season has not started yet, and therefore, no revenue has been earned.

Country Club Center Sells Season Memberships for $200 Each