In 2020, Westfort Coffee offered a Loyalty program for frequent buyers of their drinks. Any customer who uses their loyalty card will get a credit of $0.05 for every $1.00 they spend and it can be cashed in any time in 2021. Westfort Coffee also knows that 10% of all loyalty card users do not use their points. Customers with loyalty cards spent $40,000 in 2020. What is the total loyalty card value outstanding on December 31, 2020? How much should Westfort Coffee show as a liability?
In 2020, Westfort Coffee offered a Loyalty program for frequent buyers of their drinks. Any customer who uses their loyalty card will get a credit of $0.05 for every $1.00 they spend and it can be cashed in any time in 2021. Westfort Coffee also knows that 10% of all loyalty card users do not use their points. Customers with loyalty cards spent $40,000 in 2020. What is the total loyalty card value outstanding on December 31, 2020? How much should Westfort Coffee show as a liability?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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In 2020, Westfort Coffee offered a Loyalty program for frequent buyers of their drinks. Any customer who uses their loyalty card will get a credit of $0.05 for every $1.00 they spend and it can be cashed in any time in 2021. Westfort Coffee also knows that 10% of all loyalty card users do not use their points. Customers with loyalty cards spent $40,000 in 2020.
What is the total loyalty card value outstanding on December 31, 2020?
How much should Westfort Coffee show as a liability?
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