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Your client is a regional airline that has beenrecognizing revenue before it is earned. Instead of crediting deferred revenue for tickets sold but not yet
Your client is a regional airline that has beenrecognizing revenue before it is earned. Instead of crediting deferred revenue for tickets sold but not yet flown, the client recognizes revenue immediately upon sale of a ticket. Thus, revenue is overstated to the extent that there are unused tickets at year-end. You select a monetary unit sample from the airline's sales journal and determine if the selected tickets are still outstanding [unflown] at year-end. The sample disclosed several such items. The estimated (projected) 1,000,000. The 90% two-sided confidence interval on that estimate is: lower confidence limit [LCL], $500,000; upper confidence limit [UCL], $2,500,000. The maximum tolerable misstatement is $1,500,000 and the planned confidence level is 95% (2-sided). a. Present the results graphically, with numbers. b. Describe those results in words [i.e., verbally]. c. Present another graph giving the permissible range for an adjusting journal entry [AJE], with numbers. d. Give an acceptable AJE [DR and CR] in good account ing form. a. b. c. d. DR CR TO E If a passenger boards a plane with a $700 tickeet, the journal entries would be DR CR TO
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