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Sephora offers its customers a traveller's gift set as a premium in exchange for $ 40 if the customer purchases one of the top brand cosmetic makeup kits. The company purchased for cash 2,000 gift sets at $ 45 each. It estimates that 70% of customers will participate in the promotion and that 10% of the amount received from customers relates to the awarded premiums. In 2021, the company sold 3,000 makeup kits at a sales price of $ 100 resulting in sales revenue of $ 300,000. By the end of the year, 1,500 customers took advantage of the promotion. Required: a) Prepare the appropriate journal entries assuming that Sephora follows ASPE and uses the expense approach. b) Prepare the appropriate journal entries assuming that Sephora follows IFRS and uses the revenue approach. For this part of the question, assume the selling price includes the offer for the premium.

Sephora offers its customers a traveller's gift set as a premium in exchange for $ 40 if the customer purchases one of the top brand cosmetic makeup kits. The company purchased for cash 2,000 gift sets at $ 45 each. It estimates that 70% of customers will participate in the promotion and that 10% of the amount received from customers relates to the awarded premiums. In 2021, the company sold 3,000 makeup kits at a sales price of $ 100 resulting in sales revenue of $ 300,000. By the end of the year, 1,500 customers took advantage of the promotion. Required: a) Prepare the appropriate journal entries assuming that Sephora follows ASPE and uses the expense approach. b) Prepare the appropriate journal entries assuming that Sephora follows IFRS and uses the revenue approach. For this part of the question, assume the selling price includes the offer for the premium.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 18E: On December 1, 2019, AwakcAllNight Inc. sells 5,000 super caffeinated candy bars to Campus Grocers....
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Sephora offers its customers a traveller's gift set as a premium in exchange for $ 40 if the customer purchases one of the top brand cosmetic makeup kits. The company purchased for cash 2,000 gift sets at $ 45 each. It estimates that 70% of customers will participate in the promotion and that 10% of the amount received from customers relates to the awarded premiums. In 2021, the company sold 3,000 makeup kits at a sales price of $ 100 resulting in sales revenue of $ 300,000. By the end of the year, 1,500 customers took advantage of the promotion. Required: a) Prepare the appropriate journal entries assuming that Sephora follows ASPE and uses the expense approach. b) Prepare the appropriate journal entries assuming that Sephora follows IFRS and uses the revenue approach. For this part of the question, assume the selling price includes the offer for the premium.
Transcribed Image Text:Sephora offers its customers a traveller's gift set as a premium in exchange for $ 40 if the customer purchases one of the top brand cosmetic makeup kits. The company purchased for cash 2,000 gift sets at $ 45 each. It estimates that 70% of customers will participate in the promotion and that 10% of the amount received from customers relates to the awarded premiums. In 2021, the company sold 3,000 makeup kits at a sales price of $ 100 resulting in sales revenue of $ 300,000. By the end of the year, 1,500 customers took advantage of the promotion. Required: a) Prepare the appropriate journal entries assuming that Sephora follows ASPE and uses the expense approach. b) Prepare the appropriate journal entries assuming that Sephora follows IFRS and uses the revenue approach. For this part of the question, assume the selling price includes the offer for the premium.
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