Problem $6-1($Algo$)$ Upfront fees; performance obligations $[$LO$6-4,6-5]$

Fit & Slim $($F&S$)$ is a health club that offers members various gym services.

Required:

Assume F&S offers a deal whereby enrolling in a new membership for $$1,200$ provides a year of unlimited access to facilities and also entitles the member to receive a voucher redeemable for $30\%$ off yoga classes for one year. The yoga classes are offered to gym members as well as to the general public. A new membership normally sells for $$1,320,$ and a one$-$year enrollment in yoga classes sells for an additional $$550.$ F&S estimates that approximately $50\%$ of the vouchers will be redeemed. F&S offers a $10\%$ discount on all one$-$year enrollments in classes as part of its normal promotion strategy.

a$.$ & b$.$ Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price.

c$.$ Prepare the journal entry to recognize revenue for the sale of a new membership.

Assume F&S offers a "Fit $60"$ coupon book with $60$ prepaid visits over the next year. F&S has learned that Fit $60$ purchasers make an average of $50$ visits before the coupon book expires. A customer purchases a Fit $60$ book by paying $$550$ in advance, and for any additional visits over $60$ during the year after the book is purchased, the customer can pay a $$20$ visitation fee per visit. F&S typically charges $$20$ to nonmembers who use the facilities for a single day.

a$.$ & b$.$ Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price.

c$.$ Prepare the journal entry to recognize revenue for the sale of a new Fit $60$ book.