Teal Mountain Inc. has a customer loyalty program that rewards a customer with one customer loyalty point for every $100 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2020, customers purchase products for $348,000 (with a cost of $198,360) and earn 3,480 points redeemable for future purchases. Teal Mountain expects 2,900 points to be redeemed (based on its past experience, which is predictive of the amount of consideration to which it will be entitled). Teal Mountain estimates a stand-alone selling price of $2.50 per point (or $8,700 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Teal Mountain concludes that the points are a separate performance obligation.

Part A

Part B

Part C

Determine the transaction price for the product and the customer loyalty points. (Round percentage allocations to 2 decimal places, e.. 52.75 and final answers to 0 decimal places, e-s. 5,275.) Product Loyalty Points Transaction price $ Prepare the journal entries to record the sale of the product and related points on July 2, 2020. (Credit account titles are automati amounts.) Debit Credit 348,000 Date Account Titles and Explanation July 2, 2020 Cash Unearned Revenue Sales Revenue (To record sales) July 2, 2020 Cost of Goods Sold 198,360 Inventory 198,360 (To record cost of goods sold) At the end of the first reporting period (July 31, 2020), 1,000 loyalty points are redeemed. Teal Mountain continues to expect 2.900 loyalty points to be redeemed in total. Determine the amount of loyalty point revenue to be recognized at July 31, 2020. Loyalty point revenue recognized $ Prepare the journal entries for cash sales on July 31, 2020, assuming the points were applied to cash sales of $87,000 with a cost of $45.240. (Credit account titles are au the account tities and enter for the amounts. Round the calculation of revenue per point to three decimal places, e s. 52.750 and final answers to Debit Credit Date Account Titles and Explanation July 31, 2020 (To record sales.) July 31, 2020 (To record cost of goods sold.)