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 2024, the company recorded revenue of $135,400 and awarded 10,400 points. The aggregate stand-alone selling price of the purchased products is $135,000. Eighty percent of sales were cash sales, and the remainder were credit sales.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

h

ces
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
2024, the company recorded revenue of $135,400 and awarded 10,400 points. The aggregate stand-alone selling price of the
purchased products is $135,000. 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
$60,000 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.
View transaction list
Journal entry worksheet
1
2
Record the July sales.
Note: Enter debits before credits.
Transaction
1
General Journal
Cash
Accounts receivable
Sales revenue
Debit
108,000
27,000
Credit
Transcribed Image Text:ces 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 2024, the company recorded revenue of $135,400 and awarded 10,400 points. The aggregate stand-alone selling price of the purchased products is $135,000. 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 $60,000 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. View transaction list Journal entry worksheet 1 2 Record the July sales. Note: Enter debits before credits. Transaction 1 General Journal Cash Accounts receivable Sales revenue Debit 108,000 27,000 Credit
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 5 images

Blurred answer
Knowledge Booster
Gift Taxes
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education