Question $2$

$6$ pts

Use the following contract information for Question $2$ and Question $3.$

A Los Angeles daily newspaper called "LaLa Today" charges an annual subscription fee of $$90.$ Customers prepay their subscriptions and receive $260$ issues over the year. To attract more subscribers, the company offered new subscribers the ability to pay $$85$ for an annual subscription that also would include a coupon to receive a $40\%$ discount on a one$-$hour ride through Santa Monica beach in a horse$-$drawn carriage. The list price of a carriage ride is $$125$ per hour. The company estimates that approximately $20\%$ of the coupons will be redeemed.

Question $2$: How many performance obligations exist in this contract?

$0$

$1$

$2$

$3$

$4$

Question $3$

$6$ pts

Use the following contract information for Question $2$ and Question $3.$

A Los Angeles daily newspaper called "LaLa Today" charges an annual subscription fee of $$90.$ Customers prepay their subscriptions and receive $260$ issues over the year. To attract more subscribers, the company offered new subscribers the ability to pay $$85$ for an annual subscription that also would include a coupon to receive a $40\%$ discount on a one$-$hour ride through Santa Monica beach in a horse$-$drawn carriage. The list price of a carriage ride is $$125$ per hour. The company estimates that approximately $20\%$ of the coupons will be redeemed.

Question $3$: In the preparation of the journal entry to recognize the sale of $10$ new subscriptions, how deferred revenue associated with the coupon should be recorded?

$$765$ in Debit

$$765$ in Credit

$$85$ in Debit

$$85$ in Credit