McKinnon Enterprises owns a professional ice hockey team, the Rockford Penguins. The company sells season tickets for its upcoming season and receives $960,000 cash. The season starts January 1, 2018, with five home games occurring monthly over the next six months.
How much revenue will McKinnon Enterprises recognize from its season ticket sales through the end of April 2018?

Question

Quizplus · Accepted Answer

McKinnon Enterprises will recognize revenue as the games are played. By the end of April, four months have passed, with 20 games played (5 games per month). Since there are 30 games in total (5 games per month for 6 months), 2/3 of the revenue is recognized by the end of April. Therefore, 2/3 of $960,000 is $640,000.

McKinnon Enterprises Owns a Professional Ice Hockey Team, the Rockford