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L&B Inc. offers gym services for its clients. The annual membership fee per customer is...

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Question

Accounting

L&B Inc. offers gym services for its clients. The annual membership fee per customer is $1,200 which includes access to all the facility activities. In addition, L&B also charges a $50 of registration fee which is non-refundable and must be paid at the inception of the contract.

Required

  1. Please explain your reasoning if this registration fee of $50 should be considered as a

    separate performance obligation from the annual membership fee to cause a separate

    contract.

  2. Please make the journal entry for the revenue amount to be recognized per month by L&B

    when an annual membership is sold. (Assume that the considerations are received in cash.)

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