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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
PLS SHOW SOLUTION AND ANSWER
Transcribed Image Text:Problem 2-21 (IFRS)
Arianne 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 expirty date.
During 2020, the sales amounted to P7,000,000.based 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
69
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education