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Chapter 13: 24Q (page 692)

Southeast Airlines Inc. awards members of its Flightline program a second ticket at half price, valid for 2 years anywhere on its flight system, when a full-price ticket is purchased. How would you account for the full-fare and half-fare tickets?

Short Answer

Expert verified

The full and half-fare tickets should be listed as unearned transportation revenue, that is, when it is sold and identified as revenue when the transportation services are given.

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01

Meaning of account

Account is defined as a record or statement of financial expenses and revenues pertaining to a certain period.

02

Accounting for the full-fare and half-fare tickets

Southeast Airlines Incorporation award plan is in aspect of a discounted ticket sale. Thus, the full-fare ticket should be listed as unearned transportation revenue, implies that it is sold and realize it as revenue when the transportation services are given. The half-price ticket should also be treated in a similar way, that is, listing of the discounted rate as unearned transportation revenue when it is sold and realization of it as revenue when the transportation services are provided.

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