During 2016, Mount Remarkable Golf Club received $180 000 for membership fees. The accountant credits Unearned Membership

Question:

During 2016, Mount Remarkable Golf Club received $180 000 for membership fees. The accountant credits Unearned Membership Fees, a liability account, for the full amount when cash is received. At 30 June 2016, it is determined that $36 420 of the membership fees are fees for the following financial year. Ignore GST.

Required

A. What amount should be reported in the 2016 income statement for membership fees?

B. What amount should be reported in the 30 June 2016 balance sheet for unearned membership fees?

C. Prepare the adjusting entry needed at 30 June 2016.

D. What reversing entry, if any, would you make on 1 July 2016?

E. The record keeper could have recorded the receipt of cash initially in a revenue account. Prepare the adjusting entry, assuming that the Membership Fees Revenue account contains a credit balance of $180 000 at 30 June 2016.

F. Compare the balances in the Unearned Membership Fees account and the Membership Fees Revenue account derived in requirement E with those calculated in requirements A and B.

G. What reversing entry, if any, would you make on 1 July 2016 to reverse the adjusting entry made in requirement E? Explain your answer.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

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