Identifying and Recording Customer Option for Additional Merchandise A large clothing retailer chain, Kolls, offers a sales incentive program where customers recenve direct credit toward future purchases based upon the dollar amount of purdiases todiy. For everys spent today, the customer will earn a 56 credit to be used at Kolls in two weeks. The credit expires 5 days after it becomes active Not all customers will redeem the credt in the 5 day window of time. Based upon historicat trends, Kolls estimates that 35% of the credits will be redeemed. a. Determine how many performance obligations are incluted in a sales transaction during the sales incentive program. b. Assuming that Kolrs sold $375,000 of merchandise (cost of $150.000) duting the first day of the swes incentive period and 7,500,56 credes were given, record the journal entiyfes to record sale revenue. Assume all sales were cash sales. Note: Carry all decimals in calcutations; round the final answer to the nearest dollar. C. Record a summary entry to recognize revenue (if any) duting the 5 -day merchandise credt redempoion period, assum ing that 35% of the crects ate redeemed d. Record a summary entry to recognize revenue of any) at the condusion of the 5 -day merchandise credit redempticn period, assuming that no credits are rectemed. A retalles initiates an advertising campaign, which allows a customer to receive a coupon for a free gaming system DVD with the purchase of three gaming system DVDs in a ungle purchase for 3195 (3) . 555). To receive the free gaming system DVo coupon, the customer filis out a request forth and mails it to the retaler prier to the expiration date. The retaler estimates, baved on recent experience with simviar promotions, that 80\% of the customets will complete the mail in rebate required to receive the free gaming system DVD. The cost of the DVD to the retaile is s47, and is standatone seiling price is 565 Required a. How is the consideration allocated to the performance obligations in the revenue contract? -Note: Inter the allocated transaction prices in dollars and cents, rounded to the nearest pecny. -Note Round amoums to the nearest whole dotar. A retaller initiates an advertising campaign, which allows a customer to receive a coupon for a free gaming system DvD with the purchase of three gaming system DvDs in a ingle purchase for 3185 (3 555 ). To receive the free gaming system DVD coupon, the customer fills our a request form and mails it to the retaier prior to the expiration date. The retaler estimates bayed 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 retsief is f47, and is standajone selling price is $65 Required a. How is the consideration allocited to the performance obligations in the revenue contract? -Note: Enter the allocated transaction prices in dolars and cents, rounded to the nearest peany. -Note Rosind amouns to the nearest whole dotiaf. c. Assume the retailer has no past experience to estimate the amount of redemption. (1) Show how the consideration is allocated to the performance obigations in the revenue contract. - Note: Enter the allocated transaction prices in dollars and cents, rounded to the nearest penny. (2) Prepare the journal entry for sales and cost of sales for 104 sales transactions in which 3 gaming system DVDs were sold as part of each tranaction. - Note: Rosind amounts to the fiearest whole dollar. A retailer initiates an advertising campaign, which allows a customer to receive a cocipon for a free gaming system DvD with the purchase of theee gaming system DvDs in a sinele pulchase for s195 experience with similar promotions, that 80% of the custemers will complete the mailin rebate required to receive the free gaming system DvD. The cost of the din to the retaler is sa7, and ts standalone selling price is 365 . Required 3. How is the consideration alocated to the performance obligations in the fevenue contract? -Note: Enter the allocated transaction prices in dotars and cents, rounded to the nearest penny. b. Prepare the journal entry for sales and cost of sales for 104 sales transactions in which 3 gaming system DVDs were sold as part of each trassaction -Note: Round amounts to the nearest whole dollar
