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 $475,000 of merchandise (cost of $190,000) during the first day of the sales incentive period, 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. Transaction Price as Stated Standalone Selling Price Total Allocated Transaction Price (rounded) Performance Obligations Merchandise Customer option-merchandise credit 0 $ $ Account Name Debit Credit Cash 0 + + 0 A 0 To record the sale of merchandise + + 0 To record the cost of sale of merchandise c. Record a summary entry to recognize revenue (if any) during the 5-day merchandise credit redemption period, assuming that 35% of the credits are redeemed. Account Name Debit Credit 0 0 To receognize revenue. d. Record a summary entry to recognize revenue (if any) at the conclusion of the 5-day merchandise credit redemption period, assuming that no credits are redeemed. Account Name Debit Credit 0 0 To receognize revenue. Account Name Accounts Receivable Cash Contract Asset Prepaid Expense Cost of Goods Sold Accounts Payable Deferred Revenue Inventory Sales RevenueMerchandise Credit Sales Revenue-Unused Merchandise Credit N/A No list available 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 $475,000 of merchandise (cost of $190,000) during the first day of the sales incentive period, 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. Transaction Price as Stated Standalone Selling Price Total Allocated Transaction Price (rounded) Performance Obligations Merchandise Customer option-merchandise credit 0 $ $ Account Name Debit Credit Cash 0 + + 0 A 0 To record the sale of merchandise + + 0 To record the cost of sale of merchandise c. Record a summary entry to recognize revenue (if any) during the 5-day merchandise credit redemption period, assuming that 35% of the credits are redeemed. Account Name Debit Credit 0 0 To receognize revenue. d. Record a summary entry to recognize revenue (if any) at the conclusion of the 5-day merchandise credit redemption period, assuming that no credits are redeemed. Account Name Debit Credit 0 0 To receognize revenue. Account Name Accounts Receivable Cash Contract Asset Prepaid Expense Cost of Goods Sold Accounts Payable Deferred Revenue Inventory Sales RevenueMerchandise Credit Sales Revenue-Unused Merchandise Credit N/A No list available
