FINANCIAL ACCT-CONNECT
8th Edition
ISBN: 9781266627903
Author: Wild
Publisher: INTER MCG
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Allocating Transaction Price to Performance Obligations and Recording Sales
Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $280) for cash at the usual selling price of $400 and earns 400 points redeemable for $80 off future purchases of goods or services. The retailer expects redemption of 360 points or 90% of points earned.
a. How should the transaction price be allocated among the performance obligation(s)?Note: Round each allocated transaction price in the table below to the nearest dollar.
Performance Obligations
TransactionPriceas Stated
StandaloneSellingPrice
AllocatedTransaction Price(rounded)
Product purchase
Answer
Answer
Answer
Loyalty rewards
Answer
Answer
Answer
Answer
Answer
Answer
b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400…
Show-Off, Inc., sells merchandise through three retail outlets-in Las Vegas, Reno, and Sacramento-and operates a general corporate
headquarters in Reno. A review of the company's income statement indicates a record year in terms of sales and profits. Management,
though, desires additional insights about the individual stores and has asked that Judson Wyatt, a newiy hired intern, prepare a
segmented income statement. The following information has been extracted from Show-Off's accounting records:
• The sales volume, sales price, and purchase price data follow:
Reno
Sacramento
Las Vegas
37,100 units
$ 19.00
8.75
Sales volume
Unit selling price
Unit purchase price
41, 100 units
$ 17.50
8.75
46, 040 units
$ 15.25
9.75
•The following expenses were incurred for sales commissions, local advertising, property taxes, management salaries, and other
noncontrollable (but traceable) costs:
Reno
Las Vegas
5%
Sacramento
5%
Sales commissions
5%
Local advertising
Local property taxes
Sales manager…
Allocating Transaction Price to Performance Obligations and Recording Sales
Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A
customer purchases products (cost of $196) for cash at the usual selling price of $280 and earns 280 points redeemable for $56 off future purchases of goods or
services. The retailer expects redemption of 252 points or 90% of points earned.
Required
a. How should the transaction price be allocated among the performance obligation(s)?
*Note: Carry all decimals in calculations; round the final answer to the nearest dollar.
Performance
Obligations
Product purchase s
Loyalty rewards
Total
Transaction
Price
as stated
Account Name
To record sale of product.
280 ✔ S
To record cost of sale of product.
280 S
b. Prepare Maximum's journal entry to record the $280 sale to the customer and the cost of that sale where the customer earned 280 loyalty points.
*Note: If a…
Chapter 4 Solutions
FINANCIAL ACCT-CONNECT
Ch. 4 - Prob. 1DQCh. 4 - In comparing the accounts of a merchandising...Ch. 4 - Prob. 3DQCh. 4 - Prob. 4DQCh. 4 - How does a company that uses a perpetual inventory...Ch. 4 - Distinguish between cash discounts and trade...Ch. 4 - What is the difference between a sales discount...Ch. 4 - Prob. 8DQCh. 4 - Prob. 9DQCh. 4 - Prob. 10DQ
Ch. 4 - Prob. 11DQCh. 4 - Prob. 12DQCh. 4 - Refer to the income statement for Samsung in...Ch. 4 - Refer to the income statement of Samsung in...Ch. 4 - Buyers negotiate purchase contracts with...Ch. 4 - Enter the letter for each term in the blank space...Ch. 4 - Prob. 2QSCh. 4 - Prob. 3QSCh. 4 - Compute the amount to be paid for each of the four...Ch. 4 - Prepare journal entries to record each of the...Ch. 4 - Prob. 6QSCh. 4 - Prepare journal entries to record each of the...Ch. 4 - Prob. 8QSCh. 4 - Prob. 9QSCh. 4 - Prob. 10QSCh. 4 - Accounting for shrinkage—perpetual system P3...Ch. 4 - Prob. 12QSCh. 4 - Prob. 13QSCh. 4 - Prob. 14QSCh. 4 - Prob. 15QSCh. 4 - Prob. 16QSCh. 4 - Prob. 17QSCh. 4 - Prob. 18QSCh. 4 - Prob. 19QSCh. 4 - Prob. 20QSCh. 4 - Prob. 21QSCh. 4 - Prob. 22QSCh. 4 - Prob. 23QSCh. 4 - Prob. 1ECh. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Prob. 4ECh. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Prob. 8ECh. 4 - Prob. 9ECh. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Interpreting a physical count error as inventory...Ch. 4 - Prob. 16ECh. 4 - Prob. 17ECh. 4 - Prob. 18ECh. 4 - Recording sales, purchases and discounts: buyer...Ch. 4 - Prob. 20ECh. 4 - Prob. 21ECh. 4 - Prob. 22ECh. 4 - Prob. 23ECh. 4 - Prob. 1PSACh. 4 - Prepare journal entries to record the following...Ch. 4 - Prob. 3PSACh. 4 - Prob. 4PSACh. 4 - Prob. 5PSACh. 4 - Prob. 6PSACh. 4 - Prob. 1PSBCh. 4 - Prepare journal entries to record the following...Ch. 4 - Prob. 3PSBCh. 4 - Prob. 4PSBCh. 4 - Prob. 5PSBCh. 4 - Prob. 6PSBCh. 4 - Prob. 4SPCh. 4 - Prob. 1BTNCh. 4 - Prob. 2BTNCh. 4 - Prob. 3BTNCh. 4 - Prob. 4BTNCh. 4 - Prob. 5BTNCh. 4 - Prob. 7BTNCh. 4 - Prob. 8BTNCh. 4 - Prob. 9BTN
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