Problem 6-4 (Algo) Performance obligations; customer options for additional goods and services [LO6-2, 6-4, 6-5] 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 11,200 points and sold additional product of $140,000, so it recorded $151,200 of revenue. The aggregate stand-alone selling price of the purchased products is $151,200. Eighty percent of sales were cash sales, and the remainder were credit sales. Required: 1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on $67,200 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales. 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.
Problem 6-4 (Algo) Performance obligations; customer options for additional goods and services [LO6-2, 6-4, 6-5] 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 11,200 points and sold additional product of $140,000, so it recorded $151,200 of revenue. The aggregate stand-alone selling price of the purchased products is $151,200. Eighty percent of sales were cash sales, and the remainder were credit sales. Required: 1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on $67,200 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Problem 6-4 (Algo) Performance obligations; customer options for additional goods and services [LO6-2,
6-4, 6-5]
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 11,200 points and sold additional product of $140,000, so it recorded $151,200 of revenue. The
aggregate stand-alone selling price of the purchased products is $151,200. Eighty percent of sales were cash sales, and the remainder
were credit sales.
Required:
1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on
$67,200 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales.
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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F53f0d767-1729-4fa4-8707-675d9763ffa6%2Fdfbd375a-913b-4526-9760-d83fa261d833%2Fxoq5du_processed.png&w=3840&q=75)
Transcribed Image Text:Problem 6-4 (Algo) Performance obligations; customer options for additional goods and services [LO6-2,
6-4, 6-5]
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 11,200 points and sold additional product of $140,000, so it recorded $151,200 of revenue. The
aggregate stand-alone selling price of the purchased products is $151,200. Eighty percent of sales were cash sales, and the remainder
were credit sales.
Required:
1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on
$67,200 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales.
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.
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