Prepare Supply Club’s journal entry to record July and August sales. During August, customers redeem loyalty points on $82,800 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales.
Supply Club, Incorporated, sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2024, it started a loyalty program through which qualifying customers can accumulate points and redeem those points for discounts on future purchases. Redemption of a loyalty point reduces the price of one dollar of future purchases by 20% (equal to 20 cents). Customers do not earn additional loyalty points for purchases on which loyalty points are redeemed. Based on past experience, Supply Club estimates a 60% probability that any point issued will be redeemed for the discount. During July 2021, the company redeemed 13,800 points and sold additional product of $172,500, so it recorded $186,300 of revenue. The aggregate stand-alone selling price of the purchased products is $186,300. Seventy percent of sales were cash sales, and the remainder were credit sales.
Required:
1. & 2. Prepare Supply Club’s
Note: Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
