Question: Phil's Sandwich Company sells sandwiches at several locations in the northeastern part of the country. Phil's customers receive a card on their first visit that allows them to receive one free sandwich for every eight sandwiches purchased in a three-month period. Customers must redeem their cards in the month after the three-month period is completed. Each time a customer purchases a sandwich, his or her card is stamped. Past experience shows that only 50 percent of customers accumulate enough stamps within a three-month period to qualify for a free sandwich, and only 80 percent of those customers actually redeem their card to receive a free sandwich. In the first quarter of the current year, Phil's sold 12,000 sandwiches at an average price of $7.00. Phil's only accepts payment in cash.
Required: Prepare the summary journal entry Phil's Sandwich Company should make to recognize revenue from the sale of sandwiches for the first quarter of the current year.