Exercise 3-15
The following data are taken from the comparative balance sheets of Girard Billiards
Club, which prepares its financial statements using the accrual basis of accounting.
December 31 2008 2007
Fees receivable from members $14,000 $ 9,000
Unearned fees revenue 17,000 25,000
Fees are billed to members based upon their use of the club’s facilities. Unearned fees arise
from the sale of gift certificates, which members can apply to their future use of club facilities.
The 2008 income statement for the club showed that fees revenue of $153,000 was earned 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 2008.
(1) Fees receivable from 2007 were all collected.
(2) Gift certificates outstanding at the end of 2007 were all redeemed.
(3) An additional $35,000 worth of gift certificates were sold during 2008. A portion of these
was used by the recipients during the year; the remainder was still outstanding at the end
of 2008.
(4) Fees for 2008 for services provided to members were billed to members.
(5) Fees receivable for 2008 (i.e., those billed in item [4] above) were partially collected.
(b) Determine the amount of cash received by the club, with respect to fees, during 2008.
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