Pacifica Fitness Ltd is marketing a 'fitness package' in which, for $ 400 , it provides customers with a 6-month gym membership (which retails separately for $ 510 , a gym bag (which retails separately for $ 39 ) and five free zumba classes (which retail separately for 67 ). You are required to determine: a) Separate performance obligations and how much of the transaction price to allocate to each performance obligation. Good or Service Stand-alone Price Discount Allocation Allocated Amount Gym Membership Gym Bag Zumba Classes Gym Membership Gym Bag Zumba Classes Gym Membership Gym Bag Zumba Classes Total b) Pacifica Fitness Ltd sold 15 packages advance and receive first payment on 30 May 2023. The reporting period is 30 June 2023. Provide the accounting entries to record the receipt of the cash and the subsequent reporting date adjustment. 30 May 2023 Debit/Credit Description Debit Amount Credit Amount Debit Credit Cash At Bank Revenue In Advance Debit Credit Cash At Bank Revenue In Advance 30 June 2023 Debit/Credit Description Debit Amount Credit Amount Debit Credit Revenue In Advance Revenue Debit Credit Revenue Revenue In Advance c) What is the balance of revenue and liability account impacted by the above transaction (item b) at 30 August 2023. Description Total Liability Revenue Liability Revenue
Pacifica Fitness Ltd is marketing a 'fitness package' in which, for $ 400 , it provides customers with a 6-month gym membership (which retails separately for $ 510 , a gym bag (which retails separately for $ 39 ) and five free zumba classes (which retail separately for 67 ). You are required to determine:
- a) Separate performance obligations and how much of the transaction price to allocate to each performance obligation.
|
Good or Service |
Stand-alone Price |
Discount Allocation |
Allocated Amount |
|
Gym Membership Gym Bag Zumba Classes |
|||
|
Gym Membership Gym Bag Zumba Classes |
|||
|
Gym Membership Gym Bag Zumba Classes |
|||
|
Total |
- b) Pacifica Fitness Ltd sold 15 packages advance and receive first payment on 30 May 2023. The reporting period is 30 June 2023. Provide the accounting entries to record the receipt of the cash and the subsequent reporting date adjustment.
30 May 2023
|
Debit/Credit |
Description |
Debit Amount |
Credit Amount |
|
Debit Credit |
Cash At Bank Revenue In Advance |
||
|
Debit Credit |
Cash At Bank Revenue In Advance |
30 June 2023
|
Debit/Credit |
Description |
Debit Amount |
Credit Amount |
|
Debit Credit |
Revenue In Advance Revenue |
||
|
Debit Credit |
Revenue Revenue In Advance |
- c) What is the balance of revenue and liability account impacted by the above transaction (item b) at 30 August 2023.
|
Description |
Total |
|
Liability Revenue |
|
|
Liability Revenue |
Revenue means the amount earned by selling the goods or services.
Revenue is recognized in books of accounts when services are rendered or goods are delivered.
It is assumed in the question that gym bag and Zumba classes has been given in first month.
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