During 2024, Premium Footwear Company sold 1,200,000 pairs of sneakers under a customer loyalty program. Each purchase included one loyalty card which entitles the customer to a $7.50 store credit on their next purchase. Premium estimates that 60% of the loyalty cards will be redeemed, even though only 420,000 cards had been processed during 2024. At December 31, 2024, Premium should report a liability for unredeemed loyalty cards of

During 2024, Premium Footwear Company sold 1,200,000 pairs of sneakers under a customer loyalty program. Each purchase included one loyalty card which entitles the customer to a $7.50 store credit on their next purchase. Premium estimates that 60% of the loyalty cards will be redeemed, even though only 420,000 cards had been processed during 2024. At December 31, 2024, Premium should report a liability for unredeemed loyalty cards of

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6MC

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GoodBuy sells gift cards redeemable for GoodBuy products either in store or online. During 2018, GoodBuysold $1,000,000 of gift cards, and $840,000 of the gift cards were redeemed for products. As of December 31,2018, $30,000 of the remaining gift cards had passed the date at which GoodBuy concludes that the cards willnever be redeemed. How much gift card revenue should GoodBuy recognize in 2018?
MOA sells gift cards that are redeemable only at its stores. The company's policy is to record the redemption amount as realized. MOA sold P1,800,000 worth of gift certificates in 2019 and redeemed P1,560,000 worth of gift certificates. The value of outstanding gift certificates as of January 1, 2019 is P520,000. The company's gross profit margin is 40%. What is the obligation for outstanding gift cards at the end of the fiscal year on December 31, 2019?
1. What amount should be reported as sales revenue including the revenue earned from points for 2020? 2. What is the revenue earned from loyalty points for 2021?
Besik Inc. operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. During 2020, the entity issued 25,000 award credits and expects that 85% of these shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,500,000. In 2020, the entity sold goods to customers for a total consideration of P 8,500,000 based on stand-alone selling price. On Dec. 31, 2020, 10,000 award credits have been redeemed. In 2021, the management revised expectations and expects 80% of the award credits to be redeemed. In 2021, 5,000 award credits redeemed. What is the revenue earned from award credits for 2021? *a. P 956,250b. P 600,000c. P 356,250d. P 318,750
ABC Company runs a department store and grants loyalty awards to its customers. For every P 100 purchase made by the customer, the customer receives a credit of 5 points equivalent to P 5. The accumulated points can be used by the customer to as part or full payment of for merchandise purchased in the future. During the year 2019, the company made sales of P 10,000,000. The fair value of the points is equivalent to the total number of points awarded during the year. For the year 2019, ABC expects that 70,000 points will be redeemed but only 65,000 points were redeemed relating to 2019 sales. For the year 2020, an additional 20,000 points were redeemed and ABC revised its estimate that only 10,000 points granted in 2019 will be redeemed as of December 31,2020. How much revenue is recognized as a result of the redemption of points for the year 2020?
At December 31, 2022, Diamond leather should report a liability for unredeemed coupons of
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RPS co-op introduced a loyalty program in 2020. every customer who signed up would receive 3% of their total purchases as a cheque, each February for the previuos year, that could br used in sotre on any merchandise eithin the next nine months. customers could look online during the year and check their balance at any time. Laura signed up for the program in 2020. when she purchased a kayak in July for 1100. later in september she purchased a mountain bike for 2200. in March 2021 she purchased a paddle board for 2100 and used her cheque toward the purchase. A) Record the sale of Kayak and loyalty points. B)Record sale of mountain bike and loyalty points C) Record the sales of paddleboard, use of rewards points, cheque towards its purchase and the rewards points earned on sale. D) In 2020 RPS Co-op had a total pf 497,000 in sales to customers who had signed up with the loyalty program. What is the amount of liability that woudl be created by these sale?
3. Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85% 2023 15,000 90% Required: Prepare journal entries from 2020 to 2023.
In Lizzie Shoes' experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. Lizzie Shoes sold gift cards for $19,500 during August 2021. $5,000 of cards were redeemed in September 2021, $3,390 in October, $3,080 in November, and $2,380 in December 2021. In 2022 an additional $1,250 of cards were redeemed in January and $680 in February. How much gift card revenue associated with the August 2021 gift card sales would Lizzie get to recognize in 2021 and 2022?
In Lizzie Shoes’ experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. Lizzie Shoes sold gift cards for $19,150 during August 2021. $3,400 of cards were redeemed in September 2021, $3,610 in October, $2,750 in November, and $2,670 in December 2021. In 2022 an additional $1,850 of cards were redeemed in January and $535 in February.How much gift card revenue associated with the August 2021 gift card sales would Lizzie get to recognize in 2021 and 2022?