Pets Inc. launches a new advertising promotion where, for each purchase over $30, it offers a...

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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 *

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