What is the correct answer with accounting question A snack company offers one reward point with every package purchased.Customers can redeem 8 points for a free snack box worth $6. During the fiscalyear, the company sold 240,000 packages at $3.50 each. Marketing researchindicates that approximately 30% of the points will be redeemed.If the snack boxes cost the company $6 each to produce, what amount of liabilityfor reward redemptions should be recorded by the company?a. $5,400b. $18,000c. $54,000d. $72,000

Step 1: Definition of Liability for Reward RedemptionsLiability for reward redemptions is the…

Answered: A snack company offers one reward point…

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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EM Company, a grocery retailer, operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on groceries. Program members can redeem the points for further groceries. The points have no expiry date. During2019, the sales amounted to P7,000,000 and the entity have granted 10,000points. Management expects that only 80% of the points will be redeemed. The cost of each loyalty point is P100. As of December 31, 2019, 4,800 points have already been redeemed. In2020, the management revised its expectations to 90% of the points will be redeemed. As of December 31, 2020, the entity redeemed 2,400 points. What amount should be reported as revenue earned from loyalty points in 2020? A.P700,000B.P210,000C.P175,000D.P200,000
To increase sales, Pharoah Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $30 of merchandise purchased. Each point is redeemable for a $2.50 discount on any purchases of Pharoah merchandise in the next three years. After the program launched, during 2023, customers bought merchandise for $300,000 (all products are sold to provide a 30% gross profit) and earned 10,000 points redeemable for future purchases. The stand-alone selling price of the merchandise sold is $300,000. Based on prior experience with incentive programs like this, Pharoah expects 8,000 points to be redeemed related to these sales. (b) Prepare the journal entries for cash sales including the issuance of loyalty points for Pharoah in 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.…
ABC Company, a department store operates a customer loyalty program.The entity grants program members loyalty points when they spend a specified amount on their products. Program members can redeem the points for future purchases.The points have no expiry date. During 2020, the sales amounted to P 10,000,000 and the entity grants 5 points for every P 100 purchase. Management expects that only 70% of the points will be redeemed. Fair values of products sold and the reward points for the year were P 9,000,000 and P 1,000,000, respectively.As of December 31, 2020, half of the total points granted have already been redeemed. In 2021, the management revised its expectations to 90% of the points will be redeemed. As of December 31, 2021, there is a redemption of 25% of the remaining points.What amount should be reported as revenue earned from loyalty points in 2020?To input answers, kindly follow the sample format below(no peso sign, with comma, no space):ex. 100,000Failure to follow the…
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Brandin Grocers gives one loyalty point to its customers for every dollar spent in the store. The loyalty points will not expire. Customers can redeem these points and are eligible to receive a box of cookies if they redeem 100 points. Brandin Grocers purchase these cookie boxes from the baker @ $3 a box. Because the offer is so popular, 98 per cent of the customers redeem their loyalty points to get the box of cookies.In the month of December 20x1, the total sales recorded in the Store were $ 442,000. You are required to calculate the liability amount and provide the necessary entries.
Brandin Grocers gives one loyalty point to its customers for every dollar spent in the store. The loyalty points will not expire. Customers can redeem these points and are eligible to receive a box of cookies if they redeem 100 points. Brandin Grocers purchase these cookie boxes from the baker @ $3 a box. Because the offer is so popular, 98 per cent of the customers redeem their loyalty points to get the box of cookies. In the month of December 20x1, the total sales recorded in the Store were $ 442,000. You are required to calculate the liability amount and provide the necessary entries.
Please answer the questions provided and do show solutions as possible. Thank you!
Sew & More sells sewing machines and sewing supplies. The company recently ran a sales promotion on sewing machines that allowed customers to purchase a new sewing machine using store credit. The terms of the contract stated that customers would make 12 monthly payments that included a 6% annual interest rate. On the date of each sale, Sew & More should record. No revenue until the contract is paid in full. Sales revenue equal to the sales price of the sewing machine, interest revenue equal to the total amount of interest for the contract, and a receivable for the total of the sales price plus the interest. revenue equal to the sales price of the sewing machine plus the total interest to be collected and a receivable for the same amount. revenue equal to the sales price of the sewing machine and a receivable for the same amount.
On October 1, 2018, Super Soup Corp. began offering customers a Super Soup Spoon in return for 20 soup can labels. This offer expires on March 31, 2019. The cost of each soup spoon is $1.50. Based on past experience, the company estimates that only 40% of the labels will be redeemed. During 2018, the company purchased 13,000 soup spoons and sold 600,000 cans of soup at $1.20 per can (the company uses the periodic inventory method). From these sales, 180,000 labels were returned for redemption in 2018. a. Prepare the journal entry to record the purchase of 12,000 soup spoons. b. Prepare the journal entry to record the sale of 600,000 cans of soup. c. Prepare the journal entry to estimate the premium expense for 2018. d. Prepare the journal entry to record the redemption of 180,000 labels. Answer:
Blossom Inc. sells prepaid telephone cards to customers in its convenience stores. When Blossom sells cards, it then pays the telecommunications company, Cullumber, for the value of the cards less a 20% commission. Assume that Blossom receives $4,000 of prepaid cards in January 2025. Blossom sold 50% of the cards in February, 30% in March, and 20% in April. The total payment by Blossom to Cullumber over the 3 months is $3,200. Indicate how much income Blossom should recognize in January, February, March, and April. (If answer is 0, please enter O. Do not leave any fields blank.)
XZ Company, a grocery retailer operates a customer loyalty program. It grants program members loyalty points when they spend a specified amount of groceries. Program members can redeem the points for further groceries. The points have no expiry date. During the year 2020, the entity grants 100,000 points, but management expects that only 80,000 points will be redeemed. The management of XZ estimates the fair value of each loyalty point to be ₱1, and defers revenue in the amount of ₱100,000. During the year 2020, the company had redeemed 40,000 points. But during the year 2021, the management revises their expectation, it now expects to redeem 90,000 points. In 2021, the company redeemed 45,000 points. What amount of revenue from loyalty program should XZ recognize for the year ended December 31, 2021? a. ₱ 20,000 b. ₱ 25,000 c. ₱ 50,000 d. ₱ 45,000
ABC company has a contract to sell 200 bikes to a customer for $400 each and the customer has the right to return the bikes within 30 days for a full refund. Based on past experience the entity places the following probabilities on the number of bikes the customer is expected to return: Number of bikes returned Probability of outcome 0 25% 1 20% 2 28% 3 12% 4 15% Using the ‘expected value’ method, calculate the amount of revenue received from customers. Note: Provide all the calculations, do not just write the final answer.

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