Homework #2 Answers
The following are selected data taken from the financial statements of the Breakers
Billiards Club in Stockton, California.
The club uses the accrual method of
Dues are billed to the members on an annual basis.
The club also sells
gift certificates for cash.
The gift certificates are recorded as revenue when they are
redeemed, not when they are sold.
The club uses a single revenue account to record
Dec. 31, 2005
Dec. 31, 2004
Show journal entries for the net effect of the following events that took place during
fiscal year 2005.
All outstanding dues at the end of 2004 were collected from members.
All gift certificates outstanding at the end of 2004 were redeemed in 2005.
$30,000 in gift certificates were sold in 2005.
Some, but not all of them were
Dues for fiscal 2005 were all billed to members.
Some, but not all of the members
paid their dues in 2005.
22,000 Beg. Bal.
0 Beg. Bal.
17,000 ( c)
13,000 ( c)
17,000 End Bal.
153,000 Bal. prior to closing
Accounts Receivable (A)
Unearned Revenue (L