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

Required: 1. Assume F&S offers a deal whereby enrolling in anew membership for $1,300 provides a year of unlimited access tofacilities and also entitles the member to receive a voucherredeemable for 20% off yoga classes for one year. The yoga classesare offered to gym members as well as to the general public. A newmembership normally sells for $1,470, and a one-year enrollment inyoga classes sells for an additional $750. F&S estimates thatapproximately 40% of the vouchers will be redeemed. F&S offersa 10% discount on all one-year enrollments in classes as part ofits normal promotion strategy. 1. a. & b. Indicate belowwhether each item is a separate performance obligation. For eachseparate performance obligation you have indicated, allocate aportion of the contract price. c. Prepare the journal entry torecognize revenue for the sale of a new membership.

2. Assume F&S offers a “Fit 60” coupon book with 60 prepaidvisits over the next year. F&S has learned that Fit 60purchasers make an average of 50 visits before the coupon bookexpires. A customer purchases a Fit 60 book by paying $750 inadvance, and for any additional visits over 60 during the yearafter the book is purchased, the customer can pay a $20 visitationfee per visit. F&S typically charges $20 to nonmembers who usethe facilities for a single day.

a. & b. Indicate below whether each item is a separateperformance obligation. For each separate performance obligationyou have indicated, allocate a portion of the contract price. c.Prepare the journal entry to recognize revenue for the sale of anew Fit 60 book.

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