Required: (a) How many performance obligations are in a single subscription contract? (b) Prepare the journal entry to account for one new subscription of "Nova Health," clearly identifying the revenue or deferred revenue associated with each performance obligation.

Required: (a) How many performance obligations are in a single subscription contract? (b) Prepare the journal entry to account for one new subscription of "Nova Health," clearly identifying the revenue or deferred revenue associated with each performance obligation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Mammoth Publishing, Inc. owns a weekly magazine called "Nova
Health," and sells annual subscriptions for $96. Customers prepay their
subscription fee and receive 52 issues starting in the following month.
The company also offers new subscribers a 25% discount coupon on
its other weekly magazine called "Fishing & Camping," which has a list
price of $84 for an annual subscription. Mammoth estimates that
approximately 10% of the discount coupons will be redeemed.
Required:
(a) How many performance obligations are in a single subscription
contract?
(b) Prepare the journal entry to account for one new subscription of
"Nova Health," clearly identifying the revenue or deferred revenue
associated with each performance obligation.
Complete this question by entering your answers in the tabs belov
Required A
Required B
How many performance obligations are in a single subscription contract?
Number of performance obligations
2

Prepare the journal entry to account for one new subscription of "Nova Health," clearly identifying the revenue or deferred reve
associated with each performance obligation. (If no entry is required for a transaction/event, select "No journal entry required"
first account field. Round your answers to 2 decimal places.)
View transaction list View journal entry worksheet
No
1
Transaction
1
General Journal
No Transaction Recorded
< Required A
Required B >
Debit
Credit
Ⓒ

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