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Chapter 13: 24Q (page 692)

Southeast Airlines Inc. awards members of its Flightline program a second ticket at half price, valid for 2 years anywhere on its flight system, when a full-price ticket is purchased. How would you account for the full-fare and half-fare tickets?

Short Answer

Expert verified

The full and half-fare tickets should be listed as unearned transportation revenue, that is, when it is sold and identified as revenue when the transportation services are given.

Step by step solution

01

Meaning of account

Account is defined as a record or statement of financial expenses and revenues pertaining to a certain period.

02

Accounting for the full-fare and half-fare tickets

Southeast Airlines Incorporation award plan is in aspect of a discounted ticket sale. Thus, the full-fare ticket should be listed as unearned transportation revenue, implies that it is sold and realize it as revenue when the transportation services are given. The half-price ticket should also be treated in a similar way, that is, listing of the discounted rate as unearned transportation revenue when it is sold and realization of it as revenue when the transportation services are provided.

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Most popular questions from this chapter

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Accounting

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