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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 $200,000 resulting in 2,000 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. Transaction Price as Stated Performance Obligations Standalone Selling Price Total Allocated Transaction Price (rounded) Merchandise $ 200,000 $ 200,000 $ Customer option-merchandise credit 3,840 x $ 200,000 $ 203,840 $ 0 × 0 ☑ 0 Account Name To record the sale of merchandise. To record the cost of sale of merchandise. > > > Debit Credit 0 0☑ 0 0 ☑ 0 0 ☑ 0 0☑ 0 0 ☑

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 $200,000 resulting in 2,000 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. Transaction Price as Stated Performance Obligations Standalone Selling Price Total Allocated Transaction Price (rounded) Merchandise $ 200,000 $ 200,000 $ Customer option-merchandise credit 3,840 x $ 200,000 $ 203,840 $ 0 × 0 ☑ 0 Account Name To record the sale of merchandise. To record the cost of sale of merchandise. > > > Debit Credit 0 0☑ 0 0 ☑ 0 0 ☑ 0 0☑ 0 0 ☑

Excel Applications for Accounting Principles
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
Chapter21: Cash Budgeting (cashbud)
Section: Chapter Questions
Problem 1R: On January 1, Sweet Pleasures, Inc., begins business. The company has 14,000 cash on hand and is...
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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 $200,000 resulting in 2,000 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. Transaction Price as Stated Performance Obligations Standalone Selling Price Total Allocated Transaction Price (rounded) Merchandise $ 200,000 $ 200,000 $ Customer option-merchandise credit 3,840 x $ 200,000 $ 203,840 $ 0 × 0 ☑ 0 Account Name To record the sale of merchandise. To record the cost of sale of merchandise. > > > Debit Credit 0 0☑ 0 0 ☑ 0 0 ☑ 0 0☑ 0 0 ☑
Transcribed Image Text: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 $200,000 resulting in 2,000 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. Transaction Price as Stated Performance Obligations Standalone Selling Price Total Allocated Transaction Price (rounded) Merchandise $ 200,000 $ 200,000 $ Customer option-merchandise credit 3,840 x $ 200,000 $ 203,840 $ 0 × 0 ☑ 0 Account Name To record the sale of merchandise. To record the cost of sale of merchandise. > > > Debit Credit 0 0☑ 0 0 ☑ 0 0 ☑ 0 0☑ 0 0 ☑
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