Prepare journal entries to record revenue

Posa Hotels, Inc., has a sixth-night-free policy. Every sixth night a guest stays at the hotel is free. Because not all guests stay enough nights to earn a free stay, on average the number of free nights redeemed is 70% of the maximum possible number of free nights available one obtains by dividing the total number of paid nights the hotel has had by 5. Rooms at Posa Hotels cost $300 per night.

In 20X1, Posa had a total of 100,000 paid room-nights and collected a total of $30 million from customers. Also in 20X1, customers redeemed a total of 10,000 free room-nights. Some of the room-nights awarded were based on customers’ paid nights from previous years and some were based on paid nights from the current year.


Prepare journal entries to record revenue for 20X1 for Posa. (If no entry is required for a particular transaction, select “No journal entry required” in the first account field. Enter your answers in dollars and not in millions of dollars. Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

Please number transactions

1.Prepare the entry to record the revenue recognized for the nights paid by customers.

2.Prepare the entry to record the revenue recognized for the free nights redeemed by customers.


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