Jerry's Ice Cream Parlor is considering a marketing plan to increase sales of ice cream cones. The plan will give customers a free ice cream cone if they buy 10 ice cream cones at regular prices. Customers will be issued a card that will be punched each time an ice cream cone is purchased. After 10 punches, the card can be turned in for a free cone.
Jerry Donovan, the company's owner, is not sure how the new plan will affect accounting procedures. He realizes that the company will be incurring costs each time a free ice cream cone is awarded, but there will be no corresponding revenue or cash inflow.
The focus of this case is the matching of revenues and expenses related to the free ice cream cones that will be awarded if the new plan is adopted. Your instructor will divide the class into two to six groups depending on the size of the class. The mission of your group is to reach consensus on the appropriate accounting treatment for the new plan.
1. Each group member should deliberate the situation independently and draft a tentative argument prior to the class session for which the case is assigned.
2. In class, each group will meet for 10-15 minutes in different areas of the classroom. During that meeting, group members will take turns sharing their suggestions for the purpose of arriving at a single group treatment.
3. After the allotted time, a spokesperson for each group (selected during the group meetings) will share the group's solution with the class. The goal of the class is to incorporate the views of each group into a consensus approach to the situation.