Problem 2-5 (IFRS) Erika  Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for the goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows:                                                                   Redeemed      Expected to be redeemed                                        2020                   15,000                            80%                                        2021                     7,950                            85%                                        2022                     2,550                            85%                                        2023                   15,000                            90% Required: Prepare journal entries from 2020 to 2023.

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Problem 2-5 (IFRS)

Erika  Company operates a customer loyalty program. The entity grants loyalty points for goods purchased.

The loyalty points can be used by the customers in exchange for the goods of the entity. The points have no expiry date.

During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed.

The stand-alone selling price of the award credits granted is reliably measured at P1,000,000.

In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price.

The award credits redeemed and the total award credits expected to be redeemed each year are as follows: 

 

                                                               Redeemed      Expected to be redeemed

                                       2020                   15,000                            80%

                                       2021                     7,950                            85%

                                       2022                     2,550                            85%

                                       2023                   15,000                            90%

Required:

Prepare journal entries from 2020 to 2023.

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