Support Identifying and Recording Customer Option for Additional Merchandise 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 $5 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. b. Assuming that Koll's sold $700,000 of merchandise (cost of $280,000) 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: Round each allocated transaction price to the nearest whole dollar. Transac Price Performance Obligations as Stat Merchandise $ Customer option-merchandise credit $ Dr. 0 Account Name . . Sales Revenue To record the sale of merchandise. Support 0 0 0 0 To record the 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 Dr. 0 0 d. Record a summary entry to recognizer Account Name Dr. 0 Support Identifying and Recording Customer Option for Additional Merchandise 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 $5 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. b. Assuming that Koll's sold $700,000 of merchandise (cost of $280,000) 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: Round each allocated transaction price to the nearest whole dollar. Transac Price Performance Obligations as Stat Merchandise $ Customer option-merchandise credit $ Dr. 0 Account Name . . Sales Revenue To record the sale of merchandise. Support 0 0 0 0 To record the 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 Dr. 0 0 d. Record a summary entry to recognizer Account Name Dr. 0
