Separately For $530, A Gym Bag (Which Retails Se
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Pacifica Fitness Ltd Is Marketing A 'Fitness Package' In Which, For $400, It Provides Customers With A 6-Month Gym Membership (Which Retails Separately For $530, A Gym Bag (Which Retails Separately For $32) And Five Free Zumba Classes (Which Retail Separately For 69). You Are Required To Determine: (10 Marks) A) Separate Performance Obligations And How Much
Pacifica Fitness Ltd is marketing a 'fitness package' in which, for $400, it provides customers with a 6-month gym membership (which retails separately for $530, a gym bag (which retails separately for $32) and five free zumba classes (which retail separately for 69). You are required to determine:
a) Separate performance obligations and how much of the transaction price to allocate to each performance obligation.
Good or Service | Stand-alone Price | Discount Allocation | Allocated Amount |
---|---|---|---|
Total |
b) Pacifica Fitness Ltd sold 19 packages advance and receive first payment on 30 May 2023. The reporting period is 30 June 2023. Provide the accounting entries to record the receipt of the cash and the subsequent reporting date adjustment.
30 May 2023
Debit/Credit | Description | Debit Amount | Credit Amount |
---|---|---|---|
30 June 2023
Debit/Credit | Description | Debit Amount | Credit Amount |
---|---|---|---|
c) What is the balance of revenue and liability account impacted by the above transaction (item b) at 30 August 2023.
Description | Total |
---|---|
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- Pacifica Fitness Ltd is marketing a 'fitness package' in which, for $440, it provides customers with a 6-month gym membership (which retails separately for $500, a gym bag (which retails separately for $35) and five free zumba classes (which retail separately for 65). You are required to determine: a) Separate performance obligations and how much of the transaction price to allocate to each performance obligation.Pacifica Fitness Ltd is marketing a 'fitness package' in which, for $ 400 , it provides customers with a 6-month gym membership (which retails separately for $ 510 , a gym bag (which retails separately for $ 39 ) and five free zumba classes (which retail separately for 67 ). You are required to determine: a) Separate performance obligations and how much of the transaction price to allocate to each performance obligation. Good or Service Stand-alone Price Discount Allocation Allocated Amount Gym Membership Gym Bag Zumba Classes Gym Membership Gym Bag Zumba Classes Gym Membership Gym Bag Zumba Classes Total b) Pacifica Fitness Ltd sold 15 packages advance and receive first payment on 30 May 2023. The reporting period is 30 June 2023. Provide the accounting entries to record the receipt of the cash and the subsequent reporting date adjustment. 30 May 2023 Debit/Credit Description Debit Amount Credit Amount Debit…Pacifica Fitness Ltd is marketing a 'fitness package' in which, for $400, it provides customers with a 6-month gym membership (which retails separately for $530, a gym bag (which retails separately for $32) and five free zumba classes (which retail separately for 69). You are required to determine: a) Separate performance obligations and how much of the transaction price to allocate to each performance obligation. Good or Service Stand-alone Price Discount Allocation Allocated Amount Total b) Pacifica Fitness Ltd sold 19 packages advance and receive first payment on 30 May 2023. The reporting period is 30 June 2023. Provide the accounting entries to record the receipt of the cash and the subsequent reporting date adjustment. 30 May 2023 Debit/Credit Description Debit Amount Credit Amount 30 June 2023 Debit/Credit Description Debit Amount Credit Amount c) What is the balance of…
- ABC Ltd is marketing a ‘surfing bundle’ in which, for $3200, it provides customers with a surfboard (which retails separately for $2550), a wetsuit (which retails separately for $750) and five lessons (which retail separately for $600). You are required to determine: How much of the transaction price to allocate to each performance obligation?Surfside Ltd is marketing a surfing bundle in which, for $1100, it provides customers with a surfboard (which retails separately for $850), a wetsuit (which retails separately for $250), and five lessons (which retail for $200). You are required to determine: Whether separate performance obligations exist, and to explain why you made this judgement. How much of the transaction price to allocate to each performance obligation?BM Motors, Inc. employs 40 sales personnel to market its line of luxury automobiles. Theaverage car sells for P1,200,000 and a 6% commission is paid to the salesperson. BM Motorsis considering a change to a commission arrangement that woul d pay each salesperson a salaryof P24,000 per month plus a commission of 2% of the sales made by that salesperson.The amount of total car sales at which BM Motors would be indifferent as to which plan to selectis A. P22,500,000 C. P24,000,000B. P30,0 00,000 D. P12,000,000
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- Tau Limited is a manufacturing business that sales high quality kitchen electronic products. Tau Limited has just entered into 25 lucrative contracts with customers in the SADC region. Each of the contacts includes the sale of one product for P3,000. To manufacture each of these products it cost Tau P2 000 a product. In the contacts, one of the terms is that cash is received upfront and control of the product transfers on delivery. Furthermore, customers can return the product within 30 days to receive a full refund. Tau still has an option of selling the returned products for profit. Tau Limited has been in business for many years and from his experience he can estimate returns for this product quite accurately. Tau has estimated that that 23 products will not be returned. Required: How should the above transaction be accounted for?Beaumont Company enters into a contract to provide a high quality diving-certification preparation package, including goggles, snorkels, air tanks, fins, a wetsuit, and 5 private lessons to get ready for diving certifications. The entire package sells for $2,500. Other competing sellers in the same region charge an average of $250 for a set of goggles and $750 for the lessons, if sold separately. Beaumont Company usually sells at a 5% discount compared to other shops, since it is a bit farther away from the ocean. Required: What would be Beaumont’s stand-alone selling price of the goggles and the lessons, based on adjusted market assessment approach? Show computations.Beaumont Company enters into a contract to provide a high quality diving-certification preparation package, including goggles, snorkels, air tanks, fins, a wetsuit, and 5 private lessons to get ready for diving certifications. The entire package sells for $2,500. Other competing sellers in the same region charge an average of $250 for a set of goggles and $750 for the lessons, if sold separately. Beaumont Company usually sells at a 5% discount compared to other shops, since it is a bit farther away from the ocean. Typically, Beaumont incurs $375 on compensation and other costs to provide the private lessons, and earns an average of 40% profit over cost on service offerings. Required: Assuming that the diving equipment and the certification lessons are separate performance obligations, estimate the stand-alone selling price of the certified lessons based on the expected cost plus margin approach. Show computations