boule10
Aug 27, 2010, 03:35 PM
Hi there, I need some guidance for the following, which can be confusing.
Company A is selling vouchers, which the client can use as 1 night in a hotel. When used, the company A will pay the hotel.
Technically the company is selling services to the hotels, and the revenue is recognised only when the voucher is used. The revenu is the difference between the sale price of the voucher (cash received from the client), and the cost paid to the hotel(when the voucher is used).
Say -the sale price of the voucher is 40eur,
-inventory cost of 1 voucher is 5eur
-company A will need to pay 30eur to the hotel when the voucher will be used.
Here are the journal entries I try to complete:
Sale of voucher:
Dr Cash 40
CR?
Client use the voucher in hotel:
Cr Revenue (sale) 5
Cr cash 30
Dr??
Dr expense (COGS) 5
Cr inventory 5
Thanks a lot for your help on this
Company A is selling vouchers, which the client can use as 1 night in a hotel. When used, the company A will pay the hotel.
Technically the company is selling services to the hotels, and the revenue is recognised only when the voucher is used. The revenu is the difference between the sale price of the voucher (cash received from the client), and the cost paid to the hotel(when the voucher is used).
Say -the sale price of the voucher is 40eur,
-inventory cost of 1 voucher is 5eur
-company A will need to pay 30eur to the hotel when the voucher will be used.
Here are the journal entries I try to complete:
Sale of voucher:
Dr Cash 40
CR?
Client use the voucher in hotel:
Cr Revenue (sale) 5
Cr cash 30
Dr??
Dr expense (COGS) 5
Cr inventory 5
Thanks a lot for your help on this