Victoria Company sells bedsheets for P3,000 per set. There is a promotion wherein if a customer buys 4 sets in a single transaction, the customer receives a coupon for one additional set for free. Customers should go to the entity's website, fill out a request form, input the coupon number and submit online before the expiration date. It is expected that 80% of the coupons will be redeemed. During 2021, the entity sold 1,000 sets at P3,000 per set or P3,000,000. During 2022, the entity delivered 75 free additional sets. Required: 1. Compute the stand-alone price of the coupons. 2. Allocate the transaction price to the products sold and the coupons. 3. Prepare journal entries for 2021 and 2022. 4. Compute the deferred revenue from coupons on December 31, 2022.

Victoria Company sells bedsheets for P3,000 per set. There is a promotion wherein if a customer buys 4 sets in a single transaction, the customer receives a coupon for one additional set for free. Customers should go to the entity's website, fill out a request form, input the coupon number and submit online before the expiration date. It is expected that 80% of the coupons will be redeemed. During 2021, the entity sold 1,000 sets at P3,000 per set or P3,000,000. During 2022, the entity delivered 75 free additional sets. Required: 1. Compute the stand-alone price of the coupons. 2. Allocate the transaction price to the products sold and the coupons. 3. Prepare journal entries for 2021 and 2022. 4. Compute the deferred revenue from coupons on December 31, 2022.

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter13: Other Financing Alternatives

Section: Chapter Questions

Problem 1fM

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Question

Victoria Company sells bedsheets for P3,000 per set. There
is a promotion wherein if a customer buys 4 sets in a single
transaction, the customer receives a coupon for one
additional set for free. Customers should go to the entity's
website, fill out a request form, input the coupon number
and submit online before the expiration date. It is expected
that 80% of the coupons will be redeemed.
During 2021, the entity sold 1,000 sets at P3,000 per set or
P3,000,000. During 2022, the entity delivered 75 free
additional sets.
Required:
1. Compute the stand-alone price of the coupons.
2. Allocate the transaction price to the products sold and
the coupons.
3. Prepare journal entries for 2021 and 2022.
4. Compute the deferred revenue from coupons on
December 31, 2022.

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Victoria Company sells bedsheets for P3,000 per set. There is a promotion wherein if a customer buys 4 sets in a single transaction, the customer receives a coupon for one additional set for free. Customers should go to the entity's website, fill out a request form, input the coupon number and submit online before the expiration date. It is expected that 80% of the coupons will be redeemed. During 2022, the entity sold 1,000 sets at P3,000 per set or P3,000,000. During 2023, the entity delivered 75 free additional sets. Compute the deferred revenue from coupons on December 31, 2023.
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