The Shockers, a Semi-Professional Baseball Team, Prepare Financial Statements on a Monthly

question 47

Essay

The Shockers, a semi-professional baseball team, prepare financial statements on a monthly basis. Its season begins in April, but in February the team engaged in the following transactions:
1. Paid $200,000 to the city of Toronto as advance rent for use of a stadium for the six month period April 1 through September 30.
2. Collected $600,000 cash from sales of season tickets for the team's 20 home games. This amount was credited to Unearned Ticket Revenue.
During the month of April, the Shockers played four home games and three road games.
Instructions
Prepare the adjusting entries required at April 30 for the transactions above.

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Definitions:

Revenue Recognition Principle

An accounting principle that determines the specific conditions under which revenue is recognized and recorded.

Unearned Revenues

Money received by a company for a service or product that has yet to be delivered or provided.

Accrual Accounting

An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.

Recording Expenses

The process of documenting and categorizing expenditures in the financial records of an organization.