Allocating a Transaction Price and Recording Revenue and Cost of Revenue A retailer initiates an advertising campaign, which allows a customer to receive a coupon for a free garning syster DVD with the purchase of three gaming system DVDs in a single purchase for $75 (3 x $25). To receive the free gaming system DVD coupon, the customer fills out a request form and mails it to the retailer prior to the expiration date. The retailer estimates, based on recent experience with similar promotions, that 80% of the customers will complete the mail-in rebate required to receive the free gaming system DVD. The cost of the DVD to the retailer is $18, and its standalone selling price is $25. a. How is the consideration allocated to the performance obligations in the revenue contract? Note: Round the allocated transaction prices to two decimal places. Transaction Standalone le Allocated Performance Price Selling Transaction Price Obligations as Stated (rounded) DVD 75$ 0 $ Coupon Offer $ 75 $ OS 75 Price S $ 0 0 0 b. Prepare the journal entry for sales and cost of sales for 40 sales transactions in which 3 gaming system DVDs were sold as part of each transaction. Round to the nearest dollar Note: List multiple debits or credits (when applicable) in alphabetical order according to the first letter of the account name. Note: Round amounts to the nearest whole dollar. Dr. Cr. 0 0 0 0 0 O Account Name Cash + Deferred Rebate Revenue Sales Revenue DVDs To record sales Cost of Goods Sold + Inventory To record cost of sales. 0 2160 0 2160 C. Assume the retailer has no past experience to estimate the amount of redemption. (1) Show how the consideration is allocated to the performance obligations in the revenue contract. : Note: Round the allocated transaction prices to two decimal places. Transaction Standalone Allocated Performance Selling Transaction Price Obligations as stated Price (rounded) DVD $ 75$ 0$ 0 Coupon Offer 0 25 0 $ 75 05 75 Price . (2) Prepare the journal entry for sales and cost of sales for 40 sales transactions in which 3 gaming system DVDs were sold as part of each transaction. Note: List multiple debits or credits (when applicable) in alphabetical order according to the first letter of the account name, Note: Round amounts to the nearest whole dollar. Dr. 4000 0 0 Cr 0 3000 1000 Account Name Cash + Deferred Rebate Revenue Sales Revenue DVDs To record sales Cast of Goods Sold Inventory To record cost of sales 0 2160 0 2160