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1. The accountant for the cinema suggests to the owners Henri and Michelle to review accounting policy The cinema has experienced extreme financial hardship in

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1. The accountant for the cinema suggests to the owners Henri and Michelle to review accounting policy The cinema has experienced extreme financial hardship in terms of profit and cash flow in 2020 and 2021. The decision made by the Victorian Government to close all cinemas in lockdown and then limited seat capacity gradually has taken its toll. Metropolitan Melbourne was lockdown for 111 days from 9 July 2020 until 28 October 2020.- Suggestion The accountant suggests a strategy for loyal patrons (customers) to pre- purchase movie tickets when the cinema is closed during lockdown and seating is limited. He suggests this will enhance (improve) cash inflow and the tickets can be redeemed (used) when the cinema has full capacity. He suggests that a contract with all terms and conditions can be placed on the cinema website and payment can be made via this link. Action: On 20 July 2020, The French Impressionist placed on their website a contract under paragraph 9 AASB 15 to bonour all pre purchased cinerna tickets offered to customers. All conditions of the sale were detailed. The cost of a ticket was $25 and between 20 July to 28 October 2020, the following payments were received. The cinema was closed from 9 July to 30 October 2020, July 2020 100 tickets were pre-purchased August 2020 150 tickets were pre purchased September 2020 75 tickets were pre-purchased October 2020 90 tickets were pre purchased. . . . Required: 1. Referring to AASB 15 Revenue from Contracts with Customers, how would you treat the pre-purchased tickets for the month of July 2020? Justify your answer. 2. Complete the general journal entry for the pre-purchase tickets for the month of August 2020. Narration REQUIRED 3. In November 2020, 300 tickets were redeemed (used) when the cinema opened. Record the journal entry at 30 November 2020 for the 300 tickets used. No narration required

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