A new clothing company (Misfit) contracts with a retailer (Bullseye) on March 1 to sell 1,000 pairs of yoga pants for $20 each. Misfit delivers the pants to Bullseye stores on May 1 and receives payment on May 30. Given that Misfit is trying to develop their brand Misfit provides a sales incentive of $2 per item if Bullseye sells all of the inventory within 30 days and $1 if they sell within 45 days. It is also unclear whether the yoga pants will even sell. After some pressure from their auditor, Misfit estimates they could provide Bullseye with a price concession to help sell the inventory at a discount. For each of these two potential events Misfit estimates the following: 4. Sales Incentive Price Concession w/in 30 days w/in 45 days 20 percent 45 percent 20% discount 40% discount 60% discount 15 percent 10 percent 5 percent The 5% that is unaccounted for represents the case where no discount is given. Should these contract clauses be estimated for variable consideration separately or together (are these independent events or are they connected)? Assume they are connected and should be estimated jointly. Also, assume the expected value method provides the best estimate for both contract clauses. (1) Record journal entries for Misfit with regard to this contract. (2) Discuss the constraint on variable consideration in this scenario and what effect any constraint would have on revenue recognition (assume the a. b. threshold on probable is 70%). (3) Assume Bullseye sells all inventory within 45 days. Record the journal entry associated with this. Now assume the most likely amount method provides the best estimate for both contract clauses. (1) Record journal entries for Misfit with regard to this contract. (2) Discuss the constraint on variable consideration in this scenario and what effect any constraint would have on revenue recognition. (3) After making the initial journal entries, assume the yoga pants are a flop and they end up providing a 40% price concession. Record the journal entry for this. c