Taylor Marina has 300 available slips that rent for $800 per season. Payments must be made in

Question:

Taylor Marina has 300 available slips that rent for $800 per season. Payments must be made in full at the start of the boating season, April 1, 2013. Slips for the next season may be reserved if paid for by December 31, 2012. Under a new policy, if payment is made by December 31, 2012, a 5% discount is allowed. The boating season ends October 31, and the marina has a December 31 year-end. To provide cash flow for major dock repairs, the marina operator is also offering a 20% discount to slip renters who pay for the 2014 season.

   For the fiscal year ended December 31, 2012, all 300 slips were rented at full price. Two hundred slips were reserved and paid for the 2013 boating season, and 60 slips for the 2014 boating season were reserved and paid for.

Instructions
 (a) Prepare the appropriate journal entries for fiscal 2012.
  (b) Assume the marina operator is unsophisticated in business. Explain the managerial significance of the accounting above to this person.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0470587287

14th Edition

Authors: kieso, weygandt and warfield.

Question Posted: