Posa Hotels, Inc., has a sixth-night-free policy. Every sixth night a guest stays at the hotel is
Question:
Posa Hotels, Inc., has a sixth-night-free policy. Every sixth night a guest stays at the hotel is free. Because not all guests stay enough nights to earn a free stay, on average the number of free nights redeemed is 70% of the maximum possible number of free nights available one obtains by dividing the total number of paid nights the hotel has had by 5. Rooms at Posa Hotels cost $300 per night. In 20X1, Posa had a total of 100,000 paid room-nights and collected a total of $30 million from customers. Also in 20X1, customers redeemed a total of 10,000 free room-nights. Some of the room-nights awarded were based on customers’ paid nights from previous years and some were based on paid nights from the current year.
Required:
Prepare a journal entry to record revenue for 20X1 for Posa.
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer