A New York City daily newspaper called “Manhattan Today” charges an annual subscription fee of $135. Customers prepay their subscriptions and receive 260 issues over the year. To attract more subscribers, the company offered new subscribers the ability to pay $130 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 $125 per hour. The company estimates that approximately 30% of the coupons will be redeemed. Prepare the journal entry to recognize sale of 10 new subscriptions, clearly identifying the revenue or deferred revenue associated with each performance obligation. The correct answer is: DR Cash - $1,300 CR Deferred Revenue - discount coupon $130 CR Deferred Revenue - subscription $1,170 ...but I have no idea how "they" came up with the deferred revenue costs. I've asked my professor, but since it's an online summer course, they're not into checking email more than once a week. Thank you!!
A New York City daily newspaper called “Manhattan Today” charges an annual subscription fee of $135. Customers prepay their subscriptions and receive 260 issues over the year. To attract more subscribers, the company offered new subscribers the ability to pay $130 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 $125 per hour. The company estimates that approximately 30% of the coupons will be redeemed. Prepare the journal entry to recognize sale of 10 new subscriptions, clearly identifying the revenue or deferred revenue associated with each performance obligation. The correct answer is: DR Cash - $1,300 CR Deferred Revenue - discount coupon $130 CR Deferred Revenue - subscription $1,170 ...but I have no idea how "they" came up with the deferred revenue costs. I've asked my professor, but since it's an online summer course, they're not into checking email more than once a week. Thank you!!
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A New York City daily newspaper called “Manhattan Today” charges an annual subscription fee of $135. Customers prepay their subscriptions and receive 260 issues over the year. To attract more subscribers, the company offered new subscribers the ability to pay $130 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 $125 per hour. The company estimates that approximately 30% of the coupons will be redeemed.
Prepare the
The correct answer is:
DR Cash - $1,300
CR Deferred Revenue - discount coupon $130
CR Deferred Revenue - subscription $1,170
...but I have no idea how "they" came up with the deferred revenue costs. I've asked my professor, but since it's an online summer course, they're not into checking email more than once a week.
Thank you!!
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