During $2024$ Bruno started his own Karate business. His business is a private corporation. He provides Karate lessons for kids from $4$ years old to $18$ years old. Each session runs for $4$ months starting March $1$st$.$ Most of his customers pay at the beginning of the $4$ month period. Any customers that don't pay at the beginning of the session are charged the fee plus $\backslash (6\backslash \%\backslash )$ interest.

Bruno also offers $10$ passes which allow customer the opportunity to attend $10$ classes over the $4$ months when it is convenient for them to do so$.$ At the end of every $4$ month session the passes expire. $($removed extra $4)$

Bruno wants to recognize revenue for Karate classes at the end of $4$ months and he wants to recognize revenue for the passes when they expire.

Bruno has hired you to be the accountant for his business.

i$.$ Using your knowledge of qualitative characteristics. Explain which $2$ qualitative characteristics would be violated if we follow Bruno's revenue recognition policies. Hint discuss what Bruno's bias could be$.(5$ marks$)$

ii$.$ Explain when revenue should be recognized for the Karate lessons and why. He follows ASPE. Refer to the recognition criteria $($RCMP$)$ to explain when he should recognize revenue Hint: Refer to chapter $6$ Earning Approach. $(5$ marks$)$

iii. Explain when revenue should be recognized for interest $(1$ mark$)$

iv$.$ Explain when and why revenue should be recognized for $10$ passes $(2$ marks$)$

Financial Data for Bruno's business:

$-$ On March $2$nd Bruno sold $100$ sessions for $\backslash (\backslash$$ $400\backslash )$ each. $\backslash (80\backslash \%\backslash )$ of the customers paid cash.

$-$ On March $\backslash (5^\{\backslash$text $\{$th $\}\}\backslash )$ Bruno sold $30$ ten passes for $\backslash (\backslash$$ $100\backslash )$ each. The customers all paid cash. $100$ passes were used in March, $80$ passes were used in April, $65$ passes were used in May and $40$ passes were used in June.

v$.$ Prepare the journal and monthly adjusting entries for Bruno for the months of March to June $\backslash (30^\{\backslash$text $\{$th $\}\}\backslash ).$ Be sure to make a distinction between different revenue sources. $(15$ marks$)$

vi$.$ On January $\backslash (1^\{\backslash$text $\{$st $\}\}\backslash )$ one of Bruno's friends entered into agreement to pay $\backslash (\backslash$$ $2,596\backslash )$ in $2$ years $,$ imputed interest is $\backslash (4\backslash \%\backslash ).$ The payment covered karate services earned. Prepare the necessary entries over the $2$ year period. $(8$ marks$)$ Any adjusting entries for this part should be annual adjustments.

Peer evaluation $(4$ marks$)$