Question

"A theater sells a subscription series that allows patrons to attend all 8 of its productions that occur monthly from October through May. During August and September, the theater sold 1,000 subscriptions for the 2010-2011 season at $ 80 each and collected cash. How much revenue from these subscriptions should the theater recognize in its financial statements for the year ended December 31, 2010?"

Answer 1

$30,000

Step-by-step explanation:

Total cash collected = 1,000 * $80 = $80,000

Revenue to recognize for 3 months (October through December) = Total cash collected * (3 / 8) = $80,000 * (3 / 8) = $80,000 * 0.3750 = $30,000.

Therefore, the theater should recognize $30,000 revenue from these subscriptions in its financial statements for the year ended December 31, 2010.