Clarks Incorporated, 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 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. Assume Clarks cannot estimate the stand-alone 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, assuming that Clarks uses the residual method to estimate the stand- alone selling price of SunBoots sold without the discount coupon. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assume Clarks cannot estimate the stand-alone 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, assuming that Clarks uses the residual method to estimate the stand-alone selling price of SunBoots sold without the discount coupon. Note: If no entry is required for a transaction/event, select "No journal entry required in the first account field. No A Transaction 1 Cash General Journal Service revenue Deferred revenue- coupons *** Debit 70,000 Credit 64,000✔✔ 6,000 Show less A

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Clarks Incorporated, 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 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. Assume Clarks cannot estimate the stand-alone 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, assuming that Clarks uses the residual method to estimate the stand-
alone selling price of SunBoots sold without the discount coupon.
Complete this question by entering your answers in the tabs below.
Required 11
Assume Clarks cannot estimate the stand-alone 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, assuming that Clarks uses the residual method to estimate
the stand-alone selling price of SunBoots sold without the discount coupon.
Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
No
Required 2
A
Transaction
1
Cash
General Journal
Service revenue
Deferred revenue-coupons
***
Debit
70,000
Credit
64,000
6,000
Show less A
Transcribed Image Text:Clarks Incorporated, 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 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. Assume Clarks cannot estimate the stand-alone 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, assuming that Clarks uses the residual method to estimate the stand- alone selling price of SunBoots sold without the discount coupon. Complete this question by entering your answers in the tabs below. Required 11 Assume Clarks cannot estimate the stand-alone 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, assuming that Clarks uses the residual method to estimate the stand-alone selling price of SunBoots sold without the discount coupon. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. No Required 2 A Transaction 1 Cash General Journal Service revenue Deferred revenue-coupons *** Debit 70,000 Credit 64,000 6,000 Show less A
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