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. b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400 loyalty points.

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. b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400 loyalty points.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 14MC: A customer pays on credit for $1,250 worth of merchandise, terms 4/15, n/30. If the customer pays...

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