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Gift Cards and Customer Loyalty Programs The liability for unredeemed gift cards and customer loyalty programs is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $481 million as of January 29, 2022, and $616 million as of January 30, 2021. During 2021 and 2020, the Company recognized approximately $26 million and $30 million, respectively, in breakage income related to changes in breakage rate estimates. Changes in the liability for unredeemed gift cards and customer loyalty programs are as follows: Balance, beginning of year Liabilities issued but not redeemed (a) Revenue recognized from beginning liability Balance, end of year 2021 616 394 (529) 481 S 2020 (millions) 839 $ 262 (485) 616 $ 2019 856 554 (571) 839

Gift Cards and Customer Loyalty Programs The liability for unredeemed gift cards and customer loyalty programs is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $481 million as of January 29, 2022, and $616 million as of January 30, 2021. During 2021 and 2020, the Company recognized approximately $26 million and $30 million, respectively, in breakage income related to changes in breakage rate estimates. Changes in the liability for unredeemed gift cards and customer loyalty programs are as follows: Balance, beginning of year Liabilities issued but not redeemed (a) Revenue recognized from beginning liability Balance, end of year 2021 616 394 (529) 481 S 2020 (millions) 839 $ 262 (485) 616 $ 2019 856 554 (571) 839

FINANCIAL ACCOUNTING
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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Gift Cards and Customer Loyalty Programs The liability for unredeemed gift cards and customer loyalty programs is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $481 million as of January 29, 2022, and $616 million as of January 30, 2021. During 2021 and 2020, the Company recognized approximately $26 million and $30 million, respectively, in breakage income related to changes in breakage rate estimates. Changes in the liability for unredeemed gift cards and customer loyalty programs are as follows: Balance, beginning of year Liabilities issued but not redeemed (a) Revenue recognized from beginning liability Balance, end of year $ 2021 616 $ 394 (529) 481 2020 (millions) 839 $ 262 (485) 616 $ 2019 856 554 (571) 839 Required: Re-create the journal entry that was recorded for the year-ended 2021 for customers who redeemed their gift oprds or loyalty points during the year, make it clear what accounts are debited and credited and the amount.
Transcribed Image Text:Gift Cards and Customer Loyalty Programs The liability for unredeemed gift cards and customer loyalty programs is included in accounts payable and accrued liabilities on the Company's Consolidated Balance Sheets and was $481 million as of January 29, 2022, and $616 million as of January 30, 2021. During 2021 and 2020, the Company recognized approximately $26 million and $30 million, respectively, in breakage income related to changes in breakage rate estimates. Changes in the liability for unredeemed gift cards and customer loyalty programs are as follows: Balance, beginning of year Liabilities issued but not redeemed (a) Revenue recognized from beginning liability Balance, end of year $ 2021 616 $ 394 (529) 481 2020 (millions) 839 $ 262 (485) 616 $ 2019 856 554 (571) 839 Required: Re-create the journal entry that was recorded for the year-ended 2021 for customers who redeemed their gift oprds or loyalty points during the year, make it clear what accounts are debited and credited and the amount.
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