Question

A New York City daily newspaper called "Manhattan Today charges an annual subscription fee of $432. Customers prepay their subscriptions and receive 230 issues over the year. To attract more subscribers, the company offered new subscribers the ability to pay $410 for an annual subscription that also would include a coupon to receive a 40% discount on a one-hour ride through Central Park in a horse-drawn carriage. The list price of a carriage ride is $400 per hour. The company estimates that approximately 30% of the coupons will be redeemed Required: 1. How much revenue should Manhattan Today recognize upon receipt of the $410 subscription price? 2. How many performance obligations exist in this contract? 3. Prepare the journal entry to recognize sale of 11 new subscriptions, clearly identifying the revenue or deferred revenue associated with each performance obligation . Complete this question by entering your answers in the tabs below. e 1 and 2 1. How much revenue should Manhattan Today recognize upon receipt of the $410 subscription price? 2. How many performance obligations exist in this contract? 1. Revenue 2. Number of performance obligations

Answer 1

Renvenue = $0 o the been ould subscription is paid over a period of time, and fulfilled as of the Purchase of the subscription, the be for a deffered revenue. Oor in this case, Tentang would be aneaned income Number of Performance obligation in the contract a a Finst Performance Obligation Delivening Newspaper second Performance obligation = coupon for 40% discount - Debit $ 4510 Credit Name of Entry Cash (11¥ 410) Defferred revenue - Subscription ($45 10X 90%) $ 4059 $ 451 noteed Revenue - discount coupon $4510 * 107.) $400 carriage fee = $160 Value of the Coupon: 40% discount Estimated redemption - X 30% standalone selling price of Coupon $48 standalone selling Price of a normal subsription Total of standalone Prices $432 480 of roupan Obligation share coupon: ($48 $480) -10% 0 coupon - Stand alone selling price total of standalon Price $15 = 10% $15 +135 Subscaiption: 3632 $480 - 90%