Question
A New York City daily newspaper called Manhattan Today charges an annual subscription fee of $108. Customers prepay their subscriptions and receive 220 issues over
A New York City daily newspaper called Manhattan Today charges an annual subscription fee of $108. Customers prepay their subscriptions and receive 220 issues over the year. To attract more subscribers, the company offered new subscribers the ability to pay $110 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 $100 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 $110 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 unearned revenue associated with each performance obligation. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
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