Question

Ticketsales, Inc., receives $5,000,000 cash in advance ticket sales for a four-date tour of Bon Jovi. Record the advance ticket sales on October 31. Record the revenue earned for the first concert date of November 5, assuming it represents one-fourth of the advance ticket sales.

Short answer

The cash account is debited with $5,000,000, and the unearned revenue is credited with $5,000,000.

Step-by-step solution

Step-by-Step SolutionStep 1: Definition of the unearned revenue

Unearned revenue is a revenue that is received in advance.

Necessary journal entries

Date	Particulars	Debit	Credit
October 31	Cash	$5,000,000
	Unearned Revenue		$5,000,000
	(Being entry is made to record revenue earned in advance)
November 5	Unearned Ticket Revenue	$1,250,000
	Earned Ticket Revenue		$1,250,000
	(Being entry to record the revenue of the first concert)

The first entry is passed on by recording the advance revenue from the sale of the tickets. The company receives $5,000,000 in advance.

The second entry is passed on recording the revenue of the first concert.