Pets Inc. launches a new advertising promotion where, for each purchase over $30, it offers a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Pets Inc. launches a new advertising promotion where, for each purchase over $30, it offers a coupon for a 35% discount on a future purchase. There is a limit of one coupon per customer. Pets Inc. estimates that 28% of customers receiving the coupon will redeem the coupon on an average purchase of $24. Sales on the first day of the one-week promotional period totaled $180,000 resulting in 1,800 coupons distributed. Assume all sales were cash sales. Cost of sales is 45% of the selling price. a. Determine how many performance obligations are included in a sales transaction during the advertising promotion program. Assume that coupons readily available to the public online or in company fliers have a maximum discount of 20%. Two performance obligations b. Record the journal entry to record revenue in the first day of the promotion period using the relative percentages to allocate standalone selling prices. Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Performance Obligations Merchandise Customer option-merchandise credit Cash Account Name $ $ Deferred Revenue-Merchandise Credit Sales Revenue To record the sale of merchandise. Cost of Goods Sold Inventory To record the cost of sale of merchandise. Transaction Price as Stated 180,000 $ 0✓ 180,000 $ Debit 180,000 0 0 81,000 0 Standalone Selling Price 180,000 $ 2,268 x 182,268 $ Credit 0✓ 0x 0x 0✔ 81,000 ✓✔ Total Allocated Transaction Price (rounded) 2,268 * 2,268 * 4,536 c. Only 25% of the coupons were redeemed during the redemption period on qualifying purchases of $10,350. Record the entry for the redemption of the coupons, gnoring the cost entries. Account Name Deferred Revenue-Merchandise Credit Sales Revenue-Merchandise Credit Sales Revenue-Unused Merchandise Credit To receognize revenue. Debit 2,587 0 0 Credit 0x 2,587 * 2,587 * Pets Inc. launches a new advertising promotion where, for each purchase over $30, it offers a coupon for a 35% discount on a future purchase. There is a limit of one coupon per customer. Pets Inc. estimates that 28% of customers receiving the coupon will redeem the coupon on an average purchase of $24. Sales on the first day of the one-week promotional period totaled $180,000 resulting in 1,800 coupons distributed. Assume all sales were cash sales. Cost of sales is 45% of the selling price. a. Determine how many performance obligations are included in a sales transaction during the advertising promotion program. Assume that coupons readily available to the public online or in company fliers have a maximum discount of 20%. Two performance obligations b. Record the journal entry to record revenue in the first day of the promotion period using the relative percentages to allocate standalone selling prices. Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Performance Obligations Merchandise Customer option-merchandise credit Cash Account Name $ $ Deferred Revenue-Merchandise Credit Sales Revenue To record the sale of merchandise. Cost of Goods Sold Inventory To record the cost of sale of merchandise. Transaction Price as Stated 180,000 $ 0✓ 180,000 $ Debit 180,000 0 0 81,000 0 Standalone Selling Price 180,000 $ 2,268 x 182,268 $ Credit 0✓ 0x 0x 0✔ 81,000 ✓✔ Total Allocated Transaction Price (rounded) 2,268 * 2,268 * 4,536 c. Only 25% of the coupons were redeemed during the redemption period on qualifying purchases of $10,350. Record the entry for the redemption of the coupons, gnoring the cost entries. Account Name Deferred Revenue-Merchandise Credit Sales Revenue-Merchandise Credit Sales Revenue-Unused Merchandise Credit To receognize revenue. Debit 2,587 0 0 Credit 0x 2,587 * 2,587 *
Expert Answer:
Answer rating: 100% (QA)
a There are two performance obligations included in a sales transaction during the advertising promotion program This is because the customer is recei... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
Assume the same facts as in P5-2, except that customers must pay $75 to purchase the extended warranty if they don't purchase it with the $50 coupon that was included in the Protab Package. Creative...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
State whether or not each of the following events would result in a liability being recognised in the accounts at 30 June. 1. Taxes for the year ended 30 June, which are not payable until October. 2....
-
A wheel on a freight car carries a load W. If the axle of the car has a diameter D, determine the horizontal force P that must be applied to the axle to rotate the wheel. The coefficient of kinetic...
-
For the system shown in Fig. 8.17, compute the power delivered by the pump to the water to pump 50 gal/min of water at 60F to the tank. The air in the tank is at 40 psig. Consider the friction loss...
-
Which is an example of stress management by using the personal wellness strategy? (a) role negotiation (b) empowerment (c) regular physical exercise (d) flexible hours
-
On January 1, 2013, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of...
-
STION 6 ation implies causation. e Ise JESTION 7 positive relationship, b is negative b is positive a must be positive a must be negative
-
Harper Morgan owns White Mountain Assessments in Laconia, New Hampshire. The standard workweek is 40 hours. For the weekly payroll ending September 9, 2022, checks dated September 14, 2022, complete...
-
0 Required information [The following information applies to the questions displayed below.) Major League Apparel has two classes of stock authorized: 6%, $10 par preferred, and $1 par value common....
-
Simplify the expression, if possible. (If the solution is not a real number, enter NOT REAL.) 2162/3
-
What are some things you need to be mindful of as you provide recommendations using technology
-
How do media exposure modes affect our ability to engage our personal locus, thus meeting our highest goals and motivations and fulfilling our deepest needs? Which median exposure mode is most...
-
What is the "right hand rule" for a fixed magnetic field and a moving charge (draw a picture)? Describe two situations where it can be applied
-
What are the two factors successful revenue managers must utilize when they devise and implement strategic pricing plans?
-
The Gulf Corp. company has the following purchases and sales during the year ended December 31, 2014. Inventory and Purchases Sales Specific Units Sold Beginning: 300 units @ $79/unit February 15:...
-
Complete problem P10-21 using ASPE. Data from P10-21 Original cost ................................................................. $7,000,000 Accumulated depreciation...
-
Sando Ltd. made the following sales in euros during 2013 and collected the amounts owed based on the following schedule: Required (a) Prepare the journal entries to be made during the month of...
-
Why is it important to identify transactions as current or previous period transactions?
-
What recognition criteria are applied to assets and liabilities acquired in a business combination?
-
Can any financial product normally make it possible to obtain resources at below market cost?
-
Redo the exercise above, assuming in the first case that the Faurecia share rises to 40 or falls to 25. What is the impact on the value of the option? What basic feature of the option have you...
-
You wish to value a call option on the Faurecia share (which does not pay dividends) after 6 months with a strike price of 35 and a 6-month duration. You do not know what volatility to factor in....
Study smarter with the SolutionInn App