Question

As part of a January promotion, flint life fitness ltd. sold six-month membership to its gym for $300. This also included a personal fitness assessment and training plan. Active Life normally charges $360 for a six-month membership and $90 for a personal fitness assessment and training plan.

Using the five-step model, determine the amount of revenue that Flint Life would recognize in January, assuming that 320 memberships were sold as part of this promotion and that all of the personal fitness assessment and training plans were completed in January.

Amount of revenue $_______

Answer 1

Membership and fitness assessment are two separate performance obligation.

Membership	360
Fitness assessment	90
Total	450
Allocated price for
Membership (300*(360/450))	240
Fitness assessment (300*(90/450))	60

Event	Account title & explanation	Debit	Credit
Jan 1,	Cash	96,000
	Unearned membership revenue (240*320)		76,800
	Service revenue (Fitness assessment) (60*320)		19,200
	To record 320 memberships were sold.
Jan 31	Unearned membership revenue	12,800
	Membership revenue (76800/6)		12,800
	To record monthly membership fees earned

Service revenue (Fitness assessment) (60*320)		19,200
Membership revenue (76800/6)		12,800
Amount of revenue		32,000

Additional infomartion

If the 320 memberships were sold at the end of the month, then revenue would be $19200.