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ssume that Kwek-kwek Corp. participates in a customer loyalty program operated by Suka Corporation where it grants 1 point for every P200 spe

ssume that Kwek-kwek Corp. participates in a customer loyalty program operated by Suka Corporation where it grants 1 point for every P200 spe

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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Assume that Kwek-kwek Corp. participates in a customer loyalty program operated by Suka Corporation where it grants 1 point for every P200 spent on its oil products. Accumulated points by customers from Kwek-kwek Corp. may be used to settle part or in full any merchandise purchased from Suka Corporation. Kwek-kwek Corp. pays Suka P1 for each point redeemed.

In 2021, total sales of the Kwek-kwek Corp. amounted to P10,000,000. Only 45% of the 100% expected total points granted were redeemed by the customers from Suka Corporation which was used to fully settle the purchase of goods during the year.

How much is the expense to be recognized by Kwek-kwek in 2021 related to the transaction?

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