Exercise 6-6 (Static) Performance obligations; customer option for additional goods or services; residual method [LO6-2, 6-4, 6-6]

Clarks Inc., a shoe retailer, sells boots in different styles. In early November the company starts selling SunBoots 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 cant 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. Assume Clarks cannot estimate the standalone selling price of a pair of SunBoots sold without a coupon. Prepare a journal entry to record revenue for the sale of 1,000 pairs of SunBoots.