James Company has an arrangement with with Jorge Company that operates a customer loyalty program. The entity grants loyalty points of Jorge Company when they spend a specified amount on purchases. Program members can redeem their points with Jorge Company. The points have no expiry date. During 2020, the customers earned 60,000 points. The stand-alone selling price of each loyalty point is estimated at P20. The sales during 2020 amounted to P6,800,000 based on stand-alone selling price. According to Jorge Company: On December 31, 2020, 28,800 points have been redeemed in exchange for purchases. In 2021, customers have redeemed 9,000 points. How much is the initial unearned customer loyalty points to be recognized by James?
James Company has an arrangement with with Jorge Company that operates a customer loyalty program. The entity grants loyalty points of Jorge Company when they spend a specified amount on purchases. Program members can redeem their points with Jorge Company. The points have no expiry date. During 2020, the customers earned 60,000 points. The stand-alone selling price of each loyalty point is estimated at P20. The sales during 2020 amounted to P6,800,000 based on stand-alone selling price. According to Jorge Company: On December 31, 2020, 28,800 points have been redeemed in exchange for purchases. In 2021, customers have redeemed 9,000 points. How much is the initial unearned customer loyalty points to be recognized by James?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
James Company has an arrangement with with Jorge Company that operates a customer
loyalty program. The entity grants loyalty points of Jorge Company when they spend a
specified amount on purchases.
Program members can redeem their points with Jorge Company. The points have no expiry
date.
During 2020, the customers earned 60,000 points. The stand-alone selling price of each
loyalty point is estimated at P20.
The sales during 2020 amounted to P6,800,000 based on stand-alone selling price.
According to Jorge Company:
On December 31, 2020, 28,800 points have been redeemed in exchange for purchases.
In 2021, customers have redeemed 9,000 points.
How much is the initial unearned customer loyalty points to be recognized by James?
Transcribed Image Text:James Company has an arrangement with with Jorge Company that operates a customer
loyalty program. The entity grants loyalty points of Jorge Company when they spend a
specified amount on purchases.
Program members can redeem their points with Jorge Company. The points have no expiry
date.
During 2020, the customers earned 60,000 points. The stand-alone selling price of each
loyalty point is estimated at P20.
The sales during 2020 amounted to P6,800,000 based on stand-alone selling price.
According to Jorge Company:
On December 31, 2020, 28,800 points have been redeemed in exchange for purchases.
In 2021, customers have redeemed 9,000 points.
How much is the initial unearned customer loyalty points to be recognized by James?
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