According to the revenue recognition principle, revenues should be recognized when or as the company performs acts promised to the customer. for many businesses, this condition is met at the point of delivery of goods or services. the following transactions occurred in september:
required:
for each of the transactions, if revenue is to be recognized in september, indicate the amount.
activity amounta. gillespie enterprises inc. issued $13 million in new common stock. b. cal state university received $19,760,000 cash for 104,000 five-game season football tickets. none of the games have been played. c. cal state played the first football game referred to in (b).
d. hall construction company signed a contract with a customer for the construction of a new $644,000 warehouse. at the signing, hall received a check for $64,400 as a deposit to be applied against amounts earned during the first phase of construction. answer from hall’s standpoint. e. a popular snowboarding magazine company received a total of $2,300 today from subscribers. the subscriptions begin in the next fiscal year. answer from the magazine company’s standpoint.
f. t-mobile sold a $140 cell phone plan for service in september to a customer who charged the sale on his credit card. answer from the standpoint of t-mobile.

Points A, C, and F have revenue recognized in September.

Explanation:

A) Gillespie Enterprises Inc. Issues $13 million in new common stock

Account                                           Debit                  Credit

Cash                                                $13,000,000

Common Stock                                                           $13,000,000

B) Cal State University receives $19,760,000 for tickets

Account                                           Debit                    Credit

Cash                                                $19,760,000

Deferred Revenue(tickets)                                          $19,760,000

C) Cal State played the first football game

Account                                            Debit                   Credit

Deferred Revenue(tickets)             $3,952,000

Revenue                                                                       $3,952,000

D) Hall Construction Company signs a contract

Account                                             Debit                    Credit

Cash                                                  $64,000

Customer Deposit                                                          $64,000

Accounts Receivable                       $579,600

Deferred Revenue(house)                                             $579,600

E) Snowboarding Magazine receives subscriptions

Account                                              Debit                    Credit

Cash                                                   $2,300

Deferred Revenue(subscriptions)                                  $2,300

F) T-Mobile sells a phone plan

Account                                               Debit                     Credit

Cash                                                    $140

Sales Revenue(credit card sale)                                       $140