UNIT $2-$ TASK$-$BASED SIMULATION #$2$

Simulation $(10$ minutes$)$

Fit for Life is a newly established gym and fitness centre in St$.$ John's, Newfoundland. It

is owned by Muhammad Fikri, a local physiotherapist.

The business is set to open at the end of the month. As Muhammad does not have a

background in accounting, he has asked Remi Steele, a local CPA, to advise him on

how revenue should be recorded for the business. With Remi's guidance, Fit for Life

has elected to report its financial results using ASPE.

Muhammad provided the following information to Remi to assist with the analysis:

Appendix: Membership options

Complete the task in the Excel Task file. Appendix: Membership options

Fit for Life customers can choose from one of three options when selecting their

membership options:

Fitness bundle

For $$1,200$ paid in advance, new members receive an annual gym membership and $10$

one$-$hour sessions with a fitness trainer. Fit for Life expects most customers to use one

session with a trainer per month, until they are all used.

Access only

If customers prefer, they can purchase an annual membership for $$1,050.$

Pay as you go

If customers do not want to sign one$-$year contract, they can opt for a monthly

membership of $$95,$ and purchase sessions with a fitness trainer as needed for an

additional $$35$ per session. should be recorded each month. The upfront payment has already been recorded to

unearned revenue. Prepare the monthly journal entries to recognize revenue related to

one fitness bundle.

nstructions:

In Column A$,$ select the appropriate account name from the drop$-$down list. An

account name may be used once or not at all for each journal entry.

In Column B$,$ enter the corresponding debit amount. Round all amounts to the

nearest dollar.

In Column C$,$ enter the corresponding credit amount. Round all amounts to the

nearest dollar.

All rows in the table may not be needed to complete the journal entries.

If no journal entry is needed, check the $"$No journal entry required" box at the top of

the table as your response.

To record one month's worth of revenue for the fitness bundle membership $-$

gym membership portion.

Column A drop$-$down options

Accounts receivable

Cash

Gain on memberships

Membership revenue

Jnearned$/$deferred revenue