answer D

Identifying and Recording Customer Option for Additional Merchandise

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 $$320,000$ resulting in $3,200$ 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.

c$.$ Only $25\%$ of the coupons were redeemed during the redemption period on qualifying purchases of $$18,400.$

Record the entry for the redemption of the coupons, ignoring the cost entries.

d$.$ If the coupons, instead, offered $20\%$ on future purchases $($otherwise$,$ same facts as before$),$ how would the

answers change to parts a and $b,$ if at all?