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Prepare the journal entry to recognize the sale

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Reference no: EM133111430

Question - The Blade offers annual $200 memberships that entitle members to unlimited use of roller-blading facilities and locker rooms. Each new membership also entitles the member to receive ten "20% off a $5 meal" coupons that are redeemable at the Blade's snack bar. The Blade estimates that approximately 80% of the coupons will be redeemed, and that, if the coupons weren't redeemed, $5 meals still would be discounted by 5% because of ongoing promotions.

Required -

1. Calculate how much of the transaction price should be allocated to each performance obligation in the contract.

2. Prepare the journal entry to recognize the sale of a new membership. Clearly identify revenue or deferred revenue associated with each performance obligation.

Reference no: EM133111430

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