Arianne Company, a grocery retailer, operates a customer loyalty program. The entity grants program members loyalty noints when they spend a specified amount on groceries. Program members can redeem the points for further groceries. The points have no expirty date. During 2020, the sales amounted to P7,000,000 basèd on stand-alone selling price. During the year, the entity granted 10,000 points. But management expected that only 80% or 8,000 points will be redeemed. The stand alone selling price of each loyalty point is P100. On December 31, 2020, 4,800 points have been redeemed In 2021, management revised its expectations and now expected that 90% or 9,000 points will be redeemed altogether. During 2021, the entity redeemed 2,400 points. 1. What amount should be reported as sales revenue including the, revenue earned from points for 2020? a. 7,000,000 b. 8,000,000 c. 6,125,000 d. 6,650,000 2. What is the revenue earned from loyalty points for 2021? a. 700,000 b. 210,000 c. 175,000 d. 200,000

Arianne Company, a grocery retailer, operates a customer loyalty program. The entity grants program members loyalty noints when they spend a specified amount on groceries. Program members can redeem the points for further groceries. The points have no expirty date. During 2020, the sales amounted to P7,000,000 basèd on stand-alone selling price. During the year, the entity granted 10,000 points. But management expected that only 80% or 8,000 points will be redeemed. The stand alone selling price of each loyalty point is P100. On December 31, 2020, 4,800 points have been redeemed In 2021, management revised its expectations and now expected that 90% or 9,000 points will be redeemed altogether. During 2021, the entity redeemed 2,400 points. 1. What amount should be reported as sales revenue including the, revenue earned from points for 2020? a. 7,000,000 b. 8,000,000 c. 6,125,000 d. 6,650,000 2. What is the revenue earned from loyalty points for 2021? a. 700,000 b. 210,000 c. 175,000 d. 200,000

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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