Blackfeather Tours sells scuba diving and kayaking excursions, along with a number of unique sightseeing packages. The company requires a 50% payment from the customer at the time of booking. The following selected accounts appear on Blackfeather's January 31, 2014, year-end unadjusted trial balance:
Prepare the annual adjusting journal entries at January 31, 2014, using the following additional information:
a. Blackfeather Tours has custom helicopter packages in which groups are flown in and out of island retreats. The balance in this unearned account is for a group scheduled for early March 2014.
b. Three-quarters of the Unearned Tour Package Revenue account had been earned by January 31, 2014.
c. $72,000 of the Unearned Scuba Diving Revenue account remained unearned at January 31, 2014.
d. $15,500 of the Unearned Kayaking Tour Revenue account represents payments received from customers for February and March 2014. The balance in the account is for tours provided in January 2014.
Analysis Component: Using your understanding of GAAP, explain how and why unearned revenues are adjusted at the end of the accounting period.
This question was answered on: Jul 11, 2017
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