purchased, but do not earn additional loyalty pointsmade by redeeming loyalty points. Based on past experience, Supply Club estimates a 60% probability that anypoint issued will be redeemed for the discount. During July 2024, the company redeemed 11,400 points and sold additional product of$142,500, so it recorded of revenue of $153,900. The aggregate stand-alone selling price of the purchased products is $153,900.Seventy percent of sales were cash sales, and the remainder were credit sales.Required:1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on$68,400 of merchandise. Sixty-five percent of those sales were for cash, and the remainder were credit sales.Note: Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" inthe first account field.

To prepare the journal entries for Supply Club's July and August sales, we need to consider the cash…

Answered: purchased, but do not earn additional…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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To keep up with sales trends, Sunland Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $30 of purchases. Each point is redeemable for a $1 discount on any purchases of Sunland merchandise in the next two years. Following the implementation of the program, during 2023, customers purchased products for $315,000 and earned 10,500 points redeemable for future purchases. (All products are sold to provide a 40% gross profit.) The stand-alone selling price of the purchased products is $315,000. Based on prior experience with incentive programs like this, Sunland expects 9,000 points to be redeemed related to these sales. (a) Measure the separate performance obligations in the Sunland bonus point program. (Round percentage allocations to 2 decimal ploces, e.g. 25.55 and final answers to O decimal places, eg. 25,000.) Products Bonus 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.
(Customer Loyalty Program) Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2017, customers purchase products for $300,000 (with a cost of $171,000) and earn 30,000 points redeemable for future purchases. Martz expects 25,000 points to be redeemed. Martz estimates a standalone selling price of $2.50 per point (or $75,000 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Martz concludes that the points are a separate performance obligation.Instructions(a) Determine the transaction price for the product and the customer loyalty points.(b) Prepare the journal entries to record the sale of the product and related points on July 2, 2017.(c) At the end of the first reporting period (July 31, 2017), 10,000 loyalty…
ABC Department store grants loyalty awards to its customers wherein for every P 100 purchase made, the customer receives 5 points equivalent to P 5. The points accumulated by the customer may be used as part or full payment for merchandise purchases in the future. During 2018, total sales amounted to P 10,000,000. Fair values of the merchandise sold and reward points are P 9,500,000 and P 500,000, respectively. At the end 2018, 60% out of 90% have been redeemed by the customers. At the end 2019, an additional 20% have been redeemed and the revised estimate of total points expected to be redeemed was now at 95%. In accordance with IFRS 15, how much is the balance of the liability for customer loyalty awards as of December 31,2018? P 500,000 P 375,000 P 125,000 P 200,000
ABC Department store grants loyalty awards to its customers wherein for every P 100 purchase made, the customer receives 5 points equivalent to P 5. The points accumulated by the customer may be used as part or full payment for merchandise purchases in the future. During 2018, total sales amounted to P 10,000,000. Fair values of the merchandise sold and reward points are P 9,500,000 and P 500,000, respectively. At the end 2018, 60% out of 90% have been redeemed by the customers. At the end 2019, an additional 20% have been redeemed and the revised estimate of total points expected to be redeemed was now at 95%. In accordance with IFRS 15, how much revenue was recognized for the year 2018 related to loyalty awards redeemed by the customers? P 500,000 P 375,000 P 46,052.63 P 69,444.44
Allocating Transaction Price to Performance Obligations and Recording Sales 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. Performance Obligations TransactionPriceas Stated StandaloneSellingPrice AllocatedTransaction Price(rounded) Product purchase Answer Answer Answer Loyalty rewards Answer Answer Answer Answer Answer Answer b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400…
Allocating Transaction Price to Performance Obligations and Recording Sales 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 $196) for cash at the usual selling price of $280 and earns 280 points redeemable for $56 off future purchases of goods or services. The retailer expects redemption of 252 points or 90% of points earned. Required a. How should the transaction price be allocated among the performance obligation(s)? *Note: Carry all decimals in calculations; round the final answer to the nearest dollar. Performance Obligations Product purchase s Loyalty rewards Total Transaction Price as stated Account Name To record sale of product. 280 ✔ S To record cost of sale of product. 280 S b. Prepare Maximum's journal entry to record the $280 sale to the customer and the cost of that sale where the customer earned 280 loyalty points. *Note: If a…
Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2020, customers purchase products for $300,000 (with a cost of $171,000) and earn 30,000 points redeemable for future purchases. Martz expects 25,000 points to be redeemed. Martz estimates a standalone selling price of $2.50 per point (or $75,000 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Martz concludes that the points are a separate performance obligation. Instructions a. Determine the transaction price for the product and the customer loyalty points. b. Prepare the journal entries to record the sale of the product and related points on July 2, 2020. c. At the end of the first reporting period (July 31, 2020), 10,000 loyalty points are…
Part B. Beaver Limited is a retail company that sells sporting goods. The company has a customer loyalty program that allows customers to earn points based on sales made. These points can be accumulated and used for future purchases. One customer loyalty point is awarded for every $1 of purchases. During March 2023, the company recorded sales of $1,725,000 to customers who were accumulating points. The stand-alone value of these goods sold was $1,725,000. Beaver has also determined that each point has a fair value of $0.017. Required: a. What are the two performance obligations? b. Sale of Goods c. Customer Loyalty Program 1. Allocate the sales price of $1,725,000 to the two performance obligations Allocation to Performance obligation 1: $ Allocation to performance obligation 2: $ 2. Prepare the entry to record the sales (all cash) for the month of March 2023. Cash Revenue Loyalty Liability Debit 1,725,000 Credit
Use the information for the next three (3) questions. Seva Company operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on purchases. Program members can redeem the points for further purchases. The points have no expiry date.During 2020, the customer earned 60,000 points. Management expects that 100% of these points will be redeemed. The stand-alone selling price of each loyalty point is estimated at P20. The sales during 2020 amounted to P6,800,000 based on stand-alone selling price.On December 31, 2020, 28,800 points have been redeemed in exchange for purchases.In 2021, the management revised expectations and now expects 90% of the points to be redeemed. 9,000 points were redeemed during the year.How much of the sales should be allocated to the award points? How much should be recognized as revenue for 2020? How much should be recognized as revenue for 2021?
1. LALA Department store grants loyalty awards to its customers wherein for every P 100 purchase made, the customer receives 5 points equivalent to P 5. The points accumulated by the customer may be used as part or full payment for merchandise purchases in the future. During 2018, total sales amounted to P 10,000,000. Fair values of the merchandise sold and reward points are P 9,500,000 and P 500,000, respectively. At the end 2018, 60% out of 90% have been redeemed by the customers. At the end 2019, an additional 20% have been redeemed and the revised estimate of total points expected to be redeemed was now at 95%. In accordance with IFRS 15, how much is the balance of the liability for customer loyalty awards as of December 31,2018? 2. On January 1,2019, EROS Company introduced a new line of product that carries a 3 year warranty against factory defects. The product warranties provide assurance that the new line of product will function as intended based on agreed-upon…
MARYJANE, IN., a grocery business, operates a customer loyalty program. MARYJANE grants its program members points when they spend a specified amount of purchases. The points have no expiry date, and they can use the points for further purchases. During 2021, the customers earned 80,000 points, but management expects that 75% of these points will be redeemed. The stand-alone selling price of each loyalty point is estimated at Php 20. The sales during 2021 amounted to Php 6,800,000 on stand-alone selling price. On December 31, 2021, 28,800 points have been redeemed. In 2022, the management revised its expectations and now expects 85% of the points to be redeemed. In 2022, the 12,000 points were redeemed. a. 1,367,481 b. 1,200,000 c. 1,020,000 d. 1,295,238 What amount of the transaction price should be allocated to the groceries?

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