Fit & Slim is a health club that offers members various gym services. F&S accoun
ID: 2720047 • Letter: F
Question
Fit & Slim is a health club that offers members various gym services. F&S accounts reports under the ASU. 1. Assume F&S offers a deal whereby enrolling in a new membership also entitles the member to receive a voucher redeemable for 35 percent off a year’s worth of premium yoga classes. A new membership costs $2,400, and a year’s worth of premium yoga costs an additional $2,200. F&S estimates that approximately 45 percent of the vouchers will be redeemed. F&S offers a 25 percent discount on all courses as part of its seasonal promotion strategy. b. What amount of the transaction price would you allocate to the discount voucher on yoga course? (Round your answer to 2 decimal places.)
What Amount?
Prepare the journal entry to recognize revenue for the sale of a new membership. Clearly identify revenue or unearned revenue associated with each distinct performance obligation. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Round your answers to 2 decimal places.)
Prepare the journal entry necessary to recognize revenue for the sale of a new membership.
Assume F&S offers a “Fit 50” coupon book with 145 prepaid visits over the next year. F&S has learned that Fit 50 purchasers make an average of 135 visits before the coupon book expires. A customer purchases a Fit 50 book by paying $690 in advance, and for any additional visit over 145 during the year after the book is purchased, the customer can pay a $30 fee visitation fee. Depending on the season, F&S typically charges between $27 and $33 to nonmembers who wish to work out on a single day.
What amount of the transaction price would you allocate to separate performance obligations? Amount?
Prepare the journal entry to recognize revenue for the sale of a new Fit 50 book. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)
Prepare the journal entry necessary to recognize revenue for the sale of a new Fit 50 book.
c.Prepare the journal entry to recognize revenue for the sale of a new membership. Clearly identify revenue or unearned revenue associated with each distinct performance obligation. (If no entry is required for a particular event, select "No journal entry required" in the first account field. Round your answers to 2 decimal places.)
Prepare the journal entry necessary to recognize revenue for the sale of a new membership.
2.Assume F&S offers a “Fit 50” coupon book with 145 prepaid visits over the next year. F&S has learned that Fit 50 purchasers make an average of 135 visits before the coupon book expires. A customer purchases a Fit 50 book by paying $690 in advance, and for any additional visit over 145 during the year after the book is purchased, the customer can pay a $30 fee visitation fee. Depending on the season, F&S typically charges between $27 and $33 to nonmembers who wish to work out on a single day.
b.What amount of the transaction price would you allocate to separate performance obligations? Amount?
c.Prepare the journal entry to recognize revenue for the sale of a new Fit 50 book. (If no entry is required for a particular event, select "No journal entry required" in the first account field.)
Prepare the journal entry necessary to recognize revenue for the sale of a new Fit 50 book.
Explanation / Answer
1 a The amount to be allocated to the discount voucher will be the discount over and above the normal discount offered on the courses. The amount will be $ 2200 * (35%-25%) * 45% = $ 220 * 45% = $ 99 1 b Bank A/C ……..dr 2400 To Membership fees A/C 2301 To Discount on premium yoga course A/C 99 2a First we need to compute theamount of benefit given on account o FIT 50 coupons. Cost per visit as per Fit 50 = $690/135 = $5.11 Benefit given = 30 - 5.11 = $ 24.89 The amount to be charged per visit = 5.11 2 b Bank A/C ……..dr 690 To Prepaid FIT 50 A/C 690 2 b Prepaid FIT 50 A/C 5.11 To Gym fee A/C 5.11
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