USA Business Student Question - Please Help

[KevRan]

My business club had a bake sale. I loaned the club $40 to start the cash box so we could make change. At the end of the day there was $146 in the cash box. I was repaid my $40. I'm being told that the 'Total Revenue' for the day was $146. I believe it to be $106. How would this be broken down into 'proper accounting'? Is the total revenue $146 or $106?

 

[kirby]

Of the $146 in the box at the end of the day, $40 was a borrowing from you and the rest was Revenue. So Total revenue was $106. You guys need some accounting students in your club.

 

[KevRan]

That's exactly what I thought, but my instructor was insisting that the total revenue for the day was $146. I didn't understand how the loan money could be considered revenue - we didn't earn it. How do I go about having this argument with the instructor? He and the rest of the club basically beat me down until I relented that they were correct. I kept trying to say that the loan, even though it was paid back, wasn't part of the revenue or income. The only place that it could be counted was in Cash and Short Term Liabilities. It's completely separate money from the income...

Am I completely off base?

 

[kirby]

One way would be to have them create the accounting entries for the days activity

Dr Cash from Kevran $40
Cr Loan Payable to KevRan $40

Dr Cash from Sales $106
Cr Sales Revenue $106

Total right now of cash is $146
at end of day they paid you back
Dr Loan Payable to kevRan $40
Cr Cash paid to Kevran $40

So Sales Rev is only $106

OR ASK THEM TO TRY THIS :
after the sale and after they paid you back - how much cash did they have ? Cause that was their revenue. Has to be $106, unless of course, they counted something wrong.

 

[kirby]

And if they still don't get it, find another school where the level of competition is more of a challenge for you.