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Jon Snow Inc. is a retailer of low-end electronics. In December of 2015, it offered some great deals. For example, a customer can purchase the following in a package deal for an all-in great price of

Jon Snow Inc. is a retailer of low-end electronics. In December of 2015, it offered some great deals. For example, a customer can purchase the following in a package deal for an all-in great price of $800: A Blu-ray Player that normally sells for $550 (inventory cost $275) A home theater projector that normally sells for $350 (inventory' cost $ 175) A 5-year extended warranty covering both products that normally sells for $50 Customers who buy this bundle also get a 40% off coupon good for the next 30 days useable on all store merchandise. Based on experience, management expects one third of its customers to exercise the coupon and that the average customer will purchase $500 of additional merchandise with this coupon. The company also announced a 10% off all merchandise sales for the next month; customers who use the coupon do not receive that discount in addition to the coupon. On December 30, 2015, Daenerys purchases the special package (Blu-ray, projector and extended warranty). Unfortunately, the projector is on back order but Snow promises to deliver it in not less than 10 business days. Daenerys pays the full price ($800) at checkout and takes the Blu-ray home. Snow delivers the projector as promised on January 5, 2016. Daenerys returns on January' 10, 2016, and purchases an iPad mini that normally sells for $400 (inventory cost $195), using the 40% off coupon. Assume Daenerys always pays with cash. Complete the following. Provide support for your answers: What are the performance obligations under this arrangement? What are Snow's journal entries at December 30, 2015? What journal entries, if any, should Snow make on January 5, 2016? What journal entries should Snow make on January 10, assuming the customer takes possession of the iPad at checkout and does not purchase another extended warranty. How much warranty revenue will Snow recognize in 2016 on this package deal? (no journal entry necessary)

Jul 26 2021 View more View Less

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