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 earn one loyalty point for each dollar of goods purchased, but do not earn additional loyalty points for purchases that are made by redeeming loyalty points. Based on past experience, Supply Club estimates a 60 % probability that any point issued will be redeemed for the discount. During July 2024, the company redeemed 13,800 points and sold additional product of $172,500, so it recorded of revenue of $186,300. 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 journal entry to record July and August sales. During August, customers redeem loyalty points on $82,800 of merchandise. Sixty-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. View transaction list View journal entry worksheet No 1 Transaction 1 Cash Accounts receivable 2 2 General Journal Debit Credit 130,410 55,890 167,670 18,630 Sales revenue Deferred revenue - loyalty points Cash Accounts receivable Deferred revenue - loyalty points Sales revenue 14,904
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 earn one loyalty point for each dollar of goods purchased, but do not earn additional loyalty points for purchases that are made by redeeming loyalty points. Based on past experience, Supply Club estimates a 60 % probability that any point issued will be redeemed for the discount. During July 2024, the company redeemed 13,800 points and sold additional product of $172,500, so it recorded of revenue of $186,300. 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 journal entry to record July and August sales. During August, customers redeem loyalty points on $82,800 of merchandise. Sixty-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. View transaction list View journal entry worksheet No 1 Transaction 1 Cash Accounts receivable 2 2 General Journal Debit Credit 130,410 55,890 167,670 18,630 Sales revenue Deferred revenue - loyalty points Cash Accounts receivable Deferred revenue - loyalty points Sales revenue 14,904
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 earn one loyalty point for each dollar of goods purchased, but do not earn additional loyalty points
for purchases that are made by redeeming loyalty points. Based on past experience, Supply Club estimates a 60 % probability that any
point issued will be redeemed for the discount. During July 2024, the company redeemed 13,800 points and sold additional product of
$172,500, so it recorded of revenue of $186,300. 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 journal entry to record July and August sales. During August, customers redeem loyalty points on
$82,800 of merchandise. Sixty-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.
View transaction list View journal entry worksheet
No
1
Transaction
1
Cash
Accounts receivable
2
2
General Journal
Debit
Credit
130,410
55,890
167,670
18,630
Sales revenue
Deferred revenue - loyalty points
Cash
Accounts receivable
Deferred revenue - loyalty points
Sales revenue
14,904
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