1,800 Exercise 8 (Weygandt E3-14B) The following data are taken from the comparative balance sheets of Fred's Pool Club, which prepares its financial statements using the accrual basis of accounting. December 31 Accounts receivable from members Unearned service revenue 2019 2020 $19,000 $17,000 18,000 22,000 Members are billed based upon their use of the club's facilities. Unearned service revenues arise from the sale of gift certificates, which members can apply to their future use of club facilities. The 2019 income statement for the club showed that service revenue of $161,000 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 2019. (1) Accounts receivable from 2018 were all collected. (2) Gift certificates outstanding at the end of 2018 were all redeemed. (3) An additional $38,000 worth of gift certificates were sold during 2019. A portion of these was used by the recipients during the year; the remainder was still outstanding at the end of 2019. (4) Services provided to members for 2019 were billed to members. (5) Accounts receivable for 2019 (i.e., those billed in item [4] above) were partially collected. (b) Determine the amount of cash received by the club, with respect to member services, during 2019. Exercise 8-Solutions (a) 1. Cash Accounts Receivable..... 2. Unearned Revenue.... Service Revenue 900 17,000 17,000 .22,000 22,000 3. (a) Cash 38,000 Unearned Service Revenue.. 38,000 (b) Unearned Service Revenue ($38,000-$18,000)....... Service Revenue 4. Accounts Receivable........... Service Revenue. 5. Cash Accounts Receivable....... .20,000 20,000 119,000 119,000 100,000 100,000 (b) Cash received with respect to service = $17,000+ $100,000+ $38,000 = $155,000