Isabel Company is a manufacturer of deodorant and sells its product through local retailers. The deodorant costs P64 to the retailer. Retailers sell the product to its customers and for each product purchased by the customer, a coupon of P20 discount is given and may be used on future purchase of the same product. Retailers are reimbursed for the discount by the manufacturer when customers redeem their coupons. During the current year, the entity sold 10,000 deodorants to local retailers at P64, each or P640,000. The entity expected that 80% of the coupons issued will be redeemed. At year end, the entity paid the retailers P50,000 as reimbursement. Required: 1. Compute the stand-alone selling price of the rebate coupons. 2. Allocate the transaction price between the products sold and the rebate coupons. 3. Prepare journal entries for the current year.

Isabel Company is a manufacturer of deodorant and sells its product through local retailers. The deodorant costs P64 to the retailer. Retailers sell the product to its customers and for each product purchased by the customer, a coupon of P20 discount is given and may be used on future purchase of the same product. Retailers are reimbursed for the discount by the manufacturer when customers redeem their coupons. During the current year, the entity sold 10,000 deodorants to local retailers at P64, each or P640,000. The entity expected that 80% of the coupons issued will be redeemed. At year end, the entity paid the retailers P50,000 as reimbursement. Required: 1. Compute the stand-alone selling price of the rebate coupons. 2. Allocate the transaction price between the products sold and the rebate coupons. 3. Prepare journal entries for the current year.

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 15RE: GameDay sells recreational vehicles along with secure parking storage to customers. Game Day sells...

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