Assume F&S offers a “Fit 70” coupon book with 70 prepaid visits over the next year. F&S has learned that Fit 70 purchasers make an average of 60 visits before the coupon book expires. A customer purchases a Fit 70 book by paying $650 in advance, and for any additional visits over 70 during the year after the book is purchased, the customer can pay a $15 visitation fee per visit. F&S typically charges $15 to nonmembers who use the facilities for a single day. a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price. c. Prepare the journal entry to recognize revenue for the sale of a new Fit 70 boo
Assume F&S offers a “Fit 70” coupon book with 70 prepaid visits over the next year. F&S has learned that Fit 70 purchasers make an average of 60 visits before the coupon book expires. A customer purchases a Fit 70 book by paying $650 in advance, and for any additional visits over 70 during the year after the book is purchased, the customer can pay a $15 visitation fee per visit. F&S typically charges $15 to nonmembers who use the facilities for a single day. a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price. c. Prepare the journal entry to recognize revenue for the sale of a new Fit 70 boo
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
2. Assume F&S offers a “Fit 70” coupon book with 70 prepaid visits over the next year. F&S has learned that Fit 70 purchasers make an average of 60 visits before the coupon book expires. A customer purchases a Fit 70 book by paying $650 in advance, and for any additional visits over 70 during the year after the book is purchased, the customer can pay a $15 visitation fee per visit. F&S typically charges $15 to nonmembers who use the facilities for a single day.
a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price.
c. Prepare the
Transcribed Image Text:Fit & Slim (F&S) is a health club that offers members various gym services.
Required:
1. Assume F&S offers a deal whereby enrolling in a new membership for $1,500 provides a year of unlimited access to facilities and
also entitles the member to receive a voucher redeemable for 30% off yoga classes for one year. The yoga classes are offered to gym
members as well as to the general public. A new membership normally sells for $1,560, and a one-year enrollment in yoga classes
sells for an additional $650. F&S estimates that approximately 50% of the vouchers will be redeemed. F&S offers a 10% discount on all
one-year enrollments in classes as part of its normal promotion strategy.
1. a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have
indicated, allocate a portion of the contract price.
c. Prepare the journal entry to recognize revenue for the sale of a new membership.
2. Assume F&S offers a "Fit 70" coupon book with 70 prepaid visits over the next year. F&S has learned that Fit 70 purchasers make an
average of 60 visits before the coupon book expires. A customer purchases a Fit 70 book by paying $650 in advance, and for any
additional visits over 70 during the year after the book is purchased, the customer can pay a $15 visitation fee per visit. F&S typically
charges $15 to nonmembers who use the facilities for a single day.
a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have
indicated, allocate a portion of the contract price.
c. Prepare the journal entry to recognize revenue for the sale of a new Fit 70 book.
Complete this question by entering your answers in the tabs below.
Req 1A Jand 18
Reg 10
Reg 2A and 2B
Reg 20
Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have
indicated, allocate a portion of the contract price.
Percentage of Total
Stand Alone Prices
Performance
Item Description
Stand Alone Prices
Obligation?
Yoga discount voucher
Facilities access
Total stand alone price
$
0%
Percentage of
Total Stand
Alone Price
Total Transaction
Price
Allocated Contract
Price
Item Description
Yoga discount voucher
Facilities access
Total contract price
< Reg 1A and 1B
Req 1C >
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education