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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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