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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
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Tt3.
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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