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Required: 1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on $61,200 of merchandise. Sixty-five percent of those sales were for cash, 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 $61,200 of merchandise. Sixty-five percent of those sales were for cash, and the remainder were credit sales.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 10,200 points and sold additional product of $127,500, so it recorded $137,700 of revenue. The aggregate stand-alone selling price of the purchased products is $137,700. Seventy 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 $61,200 of merchandise. Sixty-five percent of those sales were for cash, and the remainder were credit sales. Journal entry worksheet Note: Enter debits before credits. Transaction Journal entry worksheet Record the August sales. Note: Enter debits before credits. 2 Transaction Cash 1 General Journal General Journal Cash Accounts receivable Sales revenue Deferred revenue - loyalty points Accounts receivable Deferred revenue - loyalty points Sales revenue Debit Credit Debit Credit
Transcribed Image Text: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 10,200 points and sold additional product of $127,500, so it recorded $137,700 of revenue. The aggregate stand-alone selling price of the purchased products is $137,700. Seventy 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 $61,200 of merchandise. Sixty-five percent of those sales were for cash, and the remainder were credit sales. Journal entry worksheet Note: Enter debits before credits. Transaction Journal entry worksheet Record the August sales. Note: Enter debits before credits. 2 Transaction Cash 1 General Journal General Journal Cash Accounts receivable Sales revenue Deferred revenue - loyalty points Accounts receivable Deferred revenue - loyalty points Sales revenue Debit Credit Debit Credit
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