Clarks Inc., a shoe retailer, sells boots in different styles. In early November the company starts selling “Sun-Boots” to customers for $70 per pair. When a customer purchases a pair of SunBoots, Clarks also gives the customer a 30% discount coupon for any additional future purchases made in the next 30 days. Customers can’t obtain the discount coupon otherwise. Clarks anticipates that approximately 20% of customers will utilize the coupon, and that on average those customers will purchase additional goods that normally sell for $100.

Required:  
1. How many performance obligations are in a contract to buy a pair of SunBoots?
2. Prepare a journal entry to record revenue for the sale of 1,000 pairs of SunBoots, assuming that Clarks uses the residual method to estimate the stand-alone selling price of SunBoots sold without the discount coupon.

Answer rating: 100% (QA)

Solution Performance obligations customer option for additional goods or service Requirement 1 Numbe... View the full answer