[Solved] Lux Hotels,Inc
Lux Hotels,Inc.has signed a service outsourcing contract with Deluxe Rooms,Inc.for $3 million,which was received in cash at contract inception.Under the agreement,Deluxe Rooms is obligated to clean and prepare over 5,000 hotels rooms managed by Lux Hotel on a daily basis from August 1,2016 to July 31,2017.
Required: Prepare any journal entry that Delux would record:
(1)at inception of the contract and
(2)at the end of 2016 to recognize all revenue associated with this contract that should be recognized in 2016.
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