Based on this information, what type of adjusting entries does the Ritz Manor have?

The Ritz Manor is a popular seaside resort. A double room costs $220 for one night. In order to reserve a room, guests must pay one night’s stay in advance. On each floor of the hotel, Vendalite Company operates vending machines with energy bars, juices, and other snacks for guests. Vendalite stocks the machines and collects revenue every week. Total average weekly revenue from these machines is $720. The Ritz Manor is entitled to 30% of the revenue from the machines. Vendalite sends a check to the Ritz Manor once at the end of each quarter for the resort’s share of the revenue.

How are the amounts of these adjustments determined?

Guests must pay one night’s stay in advance

On receiving the advance:
Dr Cash 220
Cr Advance room rental revenue 220 (liab a/c)

When the patron has stayed there and checked out:
Dr Advance roon rental revenue 220
Cr Room rental revenue 220 (revenue a/c)

Assuming a/cs are updated by Ritz Manor once a week,
Dr A/cs receivable (Vendalite Co) 216 ($720 x 30%)
Cr Vending machine revenue 216

At the end of the quarter, the a/cs receivable a/c (Vendalite) would have accumulated 13 weeks x 216 or 2808. When Ritz Manor receives the cheque from Vendalite, it'll know the exact amt, so an adjusting entry will be necessary to recognise the overs or unders, for e.g. if the cheque is for 2850, the entry is
Dr Cash 2850
Cr A/cs receivable (Vendalite) 2808
Cr Vending machine revenue 42

This is cos the $720 per week is only an estimated amount, hence 30% of this ($216) is also an estimated amt. But once a quarter upon receiving the cheque from Vendalite, Ritz will know the exact amt.

Ok here goes….LOL!

The adjusting entry that Ritz Manor must have is unearned revenue. The Ritz Manor receives a one-night pay in advance for a reservation. From my understanding, unearned revenue refers to cash received in advance of providing products and services. In addition, the Vendalite Company’s stocking of the vending machines is unearned revenue. On the other hand, it can also be earned revenue. As products or services are provided, the unearned revenue becomes earned revenues.
The amounts of these adjustments are determined by how much the Ritz Manor charges for one night in advance and what they earn for the vending machines. The process of adjusting accounts involves analyzing each account balance and the transactions and events that it is affected by.
The balance sheet accounts are affected by the adjustments. Each adjusting entry affects one or more income statement accounts and one or more balance sheets accounts but not cash.

To determine the type of adjusting entries related to the Ritz Manor, we need to analyze the information provided.

1. Payment for Room Reservations: Guests are required to pay one night's stay in advance to reserve a room. This means that when a guest makes a reservation, the Ritz Manor receives payment for a service that hasn't been provided yet. This scenario suggests that the Ritz Manor should have an unearned revenue liability account for these advanced payments.

2. Revenue from Vending Machines: The Ritz Manor is entitled to 30% of the revenue generated by the vending machines operated by Vendalite Company. However, Vendalite sends a check for the resort's share of the revenue only once at the end of each quarter. This means that the Ritz Manor hasn't received its portion of the revenue during the quarter it was earned. To account for this, the Ritz Manor should have a revenue account for its share of the vending machine revenue, which will be adjusted at the end of each quarter.

Based on the information given, the Ritz Manor would have two types of adjusting entries:

1. Adjustment for Advanced Payments for Room Reservations: At the end of each accounting period, the Ritz Manor would need to recognize the portion of advanced payment related to reservations that haven't been fulfilled yet as earned revenue. This would involve debiting the unearned revenue liability account and crediting the revenue account.

2. Adjustment for Share of Vending Machine Revenue: At the end of each quarter, the Ritz Manor would need to adjust its revenue account to include its share of the vending machine revenue, which it hasn't received until now. This would involve debiting the revenue account for the Ritz Manor's share and crediting an accounts receivable account or revenue earned account.

It's important to note that specific account names and classifications may vary depending on the accounting system and practices of the Ritz Manor. It's recommended to consult the company's financial statements or accounting policies for more accurate information.