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Residual analysis help!?
The Lake theatre is a movie theatre that has just recently opened.
They have contracted with R. Wynns Company to opperate the concession stand at the cinema. Wynns is to pay 17% of gross concession receipts (payable monthly) for the right to operate the concession stand.
How do I use a residual analysis and the definition of financial statements to determine how this entry is recorded?
1 Answer
- MohammadLv 79 years agoFavorite Answer
1. A a residual is the error in a result. Formula for calculation of residual is given at the following site:
http://en.wikipedia.org/wiki/Residual_(numerical_a...
2. Adequate data has not been given in the question to apply the residual analysis. Frankly speaking, the application of this analysis in the present question is doubtful.
3. Anyway, accounting is no problem. When concession amount is received from the R Wynns Company each month, the entry in the books of Lake Theatre will be:
Dr Cash/Bank
Cr Concession receipts.
.
