dont give answer in image format Identifying and Recording Customer Option for Additional MerchandiseA large clothing retailer chain, Koll's, offers a sales incentive program where customers receive direct credit toward future purchases basedupon the dollar amount of purchases today. For every $50 spent today, the customer will earn a $6 credit to be used at Koll's in two weeks.The credit expires 5 days after it becomes active. Not all customers will redeem the credit in the 5-day window of time. Based upon historicaltrends, Koll's estimates that 35% of the credits will be redeemed.a. Determine how many performance obligations are included in a sales transaction during the sales incentive program.Two performance obligationsb. Assuming that Koll's sold $500,000 of merchandise (cost of $200,000) during the first day of the sales incentive period and 10,000, $6credits were given, record the journal entry(ies) to record sales revenue. Assume all sales were cash sales.Note: Carry all decimals in calculations; round the final answer to the nearest dollar.PerformanceObligationsMerchandiseCustomer option-merchandise creditCashAccount Name$$Sales RevenueDeferred Revenue-Merchandise CreditTo record the sale of merchandiseCost of Goods SoldInventoryTo record the cost of sale of merchandiseTransactionPriceas Stated<< <<<500,000 S0 ✓500000 $Debit500,00000200,0000StandaloneSellingPriceCredit500,000 $21,000 ✓0479,84620,1540200,000521000 $Total AllocatedTransaction Price(rounded)479,84620,154 ✓500000 c. Record a summary entry to recognize revenue (if any) during the 5-day merchandise credit redemption period, assuming that 35% of thecredits are redeemed.Contract AssetAccount NameXSales RevenueTo receognize revenue.Contract AssetAccount NamexDebitSales RevenueTo receognize revenue.20,1540d. Record a summary entry to recognize revenue (if any) at the conclusion of the 5-day merchandise credit redemption period, assumingthat no credits are redeemed.DebitCredit20,15400x20,154 xCredit0x20,154 x

Journal entries refers to the entries which are made at the end of the period or year and it records…

A large clothing retailer chain, Koll's, offers a sales incentive program where customers receive direct credit toward future purchases based upon the dollar amount of purchases today. For every $50 spent today, the customer will earn a $6 credit to be used at Koll's in two weeks. The credit expires 5 days after it becomes active. Not all customers will redeem the credit in the 5-day window of time. Based upon historical trends, Koll's estimates that 35% of the credits will be redeemed. a. Determine how many performance obligations are included in a sales transaction during the sales incentive program. Two performance obligations b. Assuming that Koll's sold $500,000 of merchandise (cost of $200,000) during the first day of the sales incentive period and 10,000, $6 credits were given, record the journal entry(ies) to record sales revenue. Assume all sales were cash sales.

A large clothing retailer chain, Koll's, offers a sales incentive program where customers receive direct credit toward future purchases based upon the dollar amount of purchases today. For every $50 spent today, the customer will earn a $6 credit to be used at Koll's in two weeks. The credit expires 5 days after it becomes active. Not all customers will redeem the credit in the 5-day window of time. Based upon historical trends, Koll's estimates that 35% of the credits will be redeemed. a. Determine how many performance obligations are included in a sales transaction during the sales incentive program. Two performance obligations b. Assuming that Koll's sold $500,000 of merchandise (cost of $200,000) during the first day of the sales incentive period and 10,000, $6 credits were given, record the journal entry(ies) to record sales revenue. Assume all sales were cash sales.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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