Is this accrued expenses, accrued services revenue?

Question:

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.

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

o How are the amounts of these adjustments determined?

o Which accounts are affected

In the books of Ritz Manor, the accounts affected are: Vendalite Company, bills Recoverable and Bank. On weekly basis, the 30% income is taken on accrual basis, debiting bills recoverable and crediting Vendalite Company. At the end of the quarter, when the check is received, bank account is debited and bills recoverable is credited.

Is this accrued expenses, accrued services revenue?

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