A New York City daily newspaper called âManhattan Todayâ chargesan annual subscription fee of $270. Customers prepay theirsubscriptions and receive 280 issues over the year. To attract moresubscribers, the company offered new subscribers the ability to pay$260 for an annual subscription that also would include a coupon toreceive a 40% discount on a one-hour ride through Central Park in ahorse-drawn carriage. The list price of a carriage ride is $250 perhour. The company estimates that approximately 30% of the couponswill be redeemed.
Required:
1. How much revenue shouldManhattan Today recognize upon receipt of the $260 subscriptionprice?
Answer: No Revenue Recognize
2. How many performanceobligations exist in this contract?
Answer: 2
3. Prepare the journal entry to recognize sale of 10 newsubscriptions, clearly identifying the revenue or unearned revenueassociated with each performance obligation. (If no entryis required for a transaction/event, select "No journal entryrequired" in the first account field.)
Answer:
Debit. Cash [ ? ]
Credit. Deferred Revenue--Subscription [ ? ]
Credit. Deferred Revenue--Coupon [ ? ]
Show Steps please
A New York City daily newspaper called âManhattan Todayâ chargesan annual subscription fee of $270. Customers prepay theirsubscriptions and receive 280 issues over the year. To attract moresubscribers, the company offered new subscribers the ability to pay$260 for an annual subscription that also would include a coupon toreceive a 40% discount on a one-hour ride through Central Park in ahorse-drawn carriage. The list price of a carriage ride is $250 perhour. The company estimates that approximately 30% of the couponswill be redeemed. |
| Required: |
| 1. | How much revenue shouldManhattan Today recognize upon receipt of the $260 subscriptionprice? |
Answer: No Revenue Recognize
| 2. | How many performanceobligations exist in this contract? |
Answer: 2
| 3. | Prepare the journal entry to recognize sale of 10 newsubscriptions, clearly identifying the revenue or unearned revenueassociated with each performance obligation. (If no entryis required for a transaction/event, select "No journal entryrequired" in the first account field.) |
| Answer: |
Credit. Deferred Revenue--Subscription [ ? ] Credit. Deferred Revenue--Coupon [ ? ] Show Steps please |
Related questions
A New York City daily newspaper called âManhattan Todayâ chargesan annual subscription fee of $108. Customers prepay theirsubscriptions and receive 220 issues over the year. To attract moresubscribers, the company offered new subscribers the ability to pay$110 for an annual subscription that also would include a coupon toreceive a 40% discount on a one-hour ride through Central Park in ahorse-drawn carriage. The list price of a carriage ride is $100 perhour. The company estimates that approximately 30% of the couponswill be redeemed. |
| Required: |
| 1. | How much revenue should Manhattan Todayrecognize upon receipt of the $110 subscription price? |
| 2. | How many performance obligations exist inthis contract? |
| 3. | Prepare the journal entry to recognize sale of 11 newsubscriptions, clearly identifying the revenue or unearned revenueassociated with each performance obligation. (If no entryis required for a transaction/event, select "No journal entryrequired" in the first account field.) |
