What is the rationale for using the accounts and amounts

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Reference no: EM131204306

Let's examine unearned revenue and revenue recognition using an example. When I lived in Arizona I was a season ticket holder to Arizona Diamondbacks (D’backs) games. In the autumn of each year I paid for season tickets for the next season. The tickets covered 83 games, 81 regular season home games and two preseason games. I had three other partners with whom I shared the games and the cost. My partners paid me and I sent the total payment to the D'backs. Let's assume the following: I purchase two tickets per game for 83 home games at a cost of $6,640. The D'Backs close the books and report results on a monthly basis. For simplicity, assume activity is recorded in a general journal vs. a specialty journal. Please answer the following questions from the perspective of the D'backs organization:

A) Upon receipt of my payment, what journal entry must be recorded? What is the rationale for using the accounts and amounts you specified?

B) In April the D'backs played 12 home games. What journal entry, if any, must be recorded? What is the rationale for using the accounts and amounts you specified?

In your response, please explain your reasoning in terms of business activity, the impact on the financial statements, AND in terms of the accounting principle(s) involved.

Reference no: EM131204306

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