The following data are taken from the comparative statements of the financial position of Newman Billiards Club, which prepares its financial statements using the accrual basis of accounting.

 

Members are billed based on their use of the club's facilities. Unearned service revenues arise from the sale of gift certificates, which members can apply to their future use of club facilities. The 2020 income statement for the club showed that service revenue of £161,000 was recognized during the year.

Instructions

(Hint: You will probably find it helpful to use T-accounts to analyze these data.)

a.  Prepare journal entries for each of the following events that took place during 2020.

1. Accounts receivable from 2019 were all collected.

2. Gift certificates outstanding at the end of 2019 were all redeemed.

3. An additional £38,000 worth of gift certificates were sold during 2020. A portion of these was used by the recipients during the year; the remainder was still outstanding at the end of 2020.

4. Services performed for members for 2020 were billed to members.

5. Accounts receivable for 2020 (i.e., those billed in item [4] above) were partially collected.

b.     Determine the amount of cash received by the club, with respect to member services, during 2020.

Transcribed Image Text:

December 31 2020 2019 Accounts receivable from members £16,000 £ 8,000 Unearned service revenue 17,000 25,000 December 31 2020 2019 Accounts receivable from members £16,000 £ 8,000 Unearned service revenue 17,000 25,000

Answer rating: 100% (QA)

a Journal entries for each of the events that took place during 2020 No Account Title and Explanatio... View the full answer