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Social ScienceCalculate earned revenues Kirkland Theater sells season tickets for six events at a price of $180. In pricing the tickets, the planners assigned the leadoff event a value of $45 because the program was an expensive symphony orchestra. The last five events were priced equally; 1,500 season tickets were sold for the 2016 season.Required:a. Calculate the theater’s earned revenue after the first three events have been presented.b. About 95% of the season ticket holders attended the first event. Subsequent events were attended by about 80% of the season ticket holders. To what extent, if any, should the attendance data impact revenue recognition? Explain your answer.
Calculate earned revenues Kirkland Theater sells season tickets for six events at a price of $180. In pricing the tickets, the planners assigned the leadoff event a value of $45 because the program was an expensive symphony orchestra. The last five events were priced equally; 1,500 season tickets were sold for the 2016 season.
Required:
a. Calculate the theater’s earned revenue after the first three events have been presented.
b. About 95% of the season ticket holders attended the first event. Subsequent events were attended by about 80% of the season ticket holders. To what extent, if any, should the attendance data impact revenue recognition? Explain your answer.
Expert Answer
Revenue is the amount that a company earns from normal activities conducted by the business for example: revenue from sales of goods and services, interest received, royalties received etc. Revenue recognition is one of the principles of accounting that determines the revenue and expenses recognized in a particular period.
a. Given:
Total price of the tickets for 6 events= $180
First event’s ticket price= $45
Number of season tickets sold= 1500
Calculation for revenue earned:
Revenue earned after first event’s tickets are sold= $45 × 1500
= $67,500
Revenue earned after second event’s tickets are sold= $27 × 1500
= $40,500
Revenue earned after third event’s tickets are sold= $27 × 1500
= $40,500
Theatre’s total revenue after first three events= $67,500 + $40,500 + $40,500
= $148,500
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Equal price per ticket has been allotted to the remaining 5 events $180-$45 Price per remaining event = 5 $27
b. It makes no difference in the revenue recognition even if only 95% of the people attended the first event and 80% attended the subsequent events as the company sold the tickets in advance. Th...
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