Hill and Dale Enterprises offers a promotion that provides a customer signing up for a membership the opportunity to enroll in educational courses. A customer signing up the first time is entitled to a 25% discount off a full year 's worth of courses. A new membership costs $1,600 annually and a year's worth of courses another $1,200. Hill and Dale estimate that approximately 40% of the customers will take advantage of the 25% discount. The company is offering a 10% discount on all courses at this time.
Required:
a. Identify the separate performance obligations in the new customer deal.
b. Allocate the price to the separate performance obligations. Use the most-likely amount approach.
c. Record the journal entry to record the sale of a new membership and one year of courses. The customer paid cash.

Question

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The Answer of Hill and Dale Enterprises offers a promotion that provides a customer signing up for a membership the opportunity to enroll in educational courses. A customer signing up the first time is entitled to a 25% discount off a full year 's worth of courses. A new membership costs $1,600 annually and a year's worth of courses another $1,200. Hill and Dale estimate that approximately 40% of the customers will take advantage of the 25% discount. The company is offering a 10% discount on all courses at this time.
Required:
a. Identify the separate performance obligations in the new customer deal.
b. Allocate the price to the separate performance obligations. Use the most-likely amount approach.
c. Record the journal entry to record the sale of a new membership and one year of courses. The customer paid cash.

Hill and Dale Enterprises Offers a Promotion That Provides a Customer