The following are three independent situations.1. Sandhill Rewards Inc. provides rewards services to licensees. Sandhill records service revenue related to rewards (granted as reward vouchers, which can be redeemed at a variety of retailers) and recognizes the cost of redemptions in the year vouchers aresold to licensees. Sandhill's past experience indicates that only 80% of the vouchers sold to licensees will be redeemed. Sandhill's liability for stamp redemptions was $12,693,900 at December 31, 2024. Additional information for 2025 is as follows.Service revenue from vouchers sold to licenseesCost of redemptions (vouchers sold prior to 1/1/25)$8,614,200If all the vouchers sold in 2025 were presented for redemption in 2026, the redemption cost would be $5,173,300. What amount should Sandhill report as a liability for voucher redemptions at December 31, 2025?Liability for stamp redemptions at December 31, 2025 $Consumer expiration dateTotal face amount of coupons issuedTotal payments to retailers as of 12/31/252. In packages of its products, Teal Inc. includes coupons that may be presented at retail stores to obtain discounts on other Teal products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. Tealhonors requests for coupon redemption by retailers up to 3 months after the consumer expiration date. Teal estimates that 60% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by Teal during 2025 is as follows.5,494,900Liability for unredeemed coupons $12/31/25$766,200321,870What amount should Teal report as a liability for unredeemed coupons at December 31, 2025?3. Flint Company sold 720,100 boxes of pie mix under a new sales promotional program. Each box contains one coupon, which submitted with $4.80, entitles the customer to a baking pan. Flint pays $6.80 per pan and $1.30 for handling and shipping. Flintestimates that 70% of the coupons will be redeemed, even though only 257,000 coupons had been processed during 2025. What amount should Flint report as a liability for unredeemed coupons at December 31, 2025?Liability for unredeemed coupons at December 31, 2025 $

As per past experience only 80% of vouchers sold $5173300 × 80% = $4138640

The following are three independent situations. 1. Sandhill Rewards Inc. provides rewards services to licensees. Sandhill records service revenue related to rewards (granted as reward vouchers, which can be redeemed at a variety of retailers) and recognizes the cost of redemptions in the year vouchers are sold to licensees. Sandhill's past experience indicates that only 80% of the vouchers sold to licensees will be redeemed. Sandhill's liability for stamp redemptions was $12,693,900 at December 31, 2024. Additional information for 2025 is as follows. Service revenue from vouchers sold to licensees Cost of redemptions (vouchers sold prior to 1/1/25) $8,614,200 5,494,900 If all the vouchers sold in 2025 were presented for redemption in 2026, the redemption cost would be $5,173,300. What amount should Sandhill report as a liability for voucher redemptions at December 31, 2025? Liability for stamp redemptions at December 31, 2025 $

The following are three independent situations. 1. Sandhill Rewards Inc. provides rewards services to licensees. Sandhill records service revenue related to rewards (granted as reward vouchers, which can be redeemed at a variety of retailers) and recognizes the cost of redemptions in the year vouchers are sold to licensees. Sandhill's past experience indicates that only 80% of the vouchers sold to licensees will be redeemed. Sandhill's liability for stamp redemptions was $12,693,900 at December 31, 2024. Additional information for 2025 is as follows. Service revenue from vouchers sold to licensees Cost of redemptions (vouchers sold prior to 1/1/25) $8,614,200 5,494,900 If all the vouchers sold in 2025 were presented for redemption in 2026, the redemption cost would be $5,173,300. What amount should Sandhill report as a liability for voucher redemptions at December 31, 2025? Liability for stamp redemptions at December 31, 2025 $

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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Complete Electronics Inc. sells a point - of -sale computer with a two- year service contract. Complete collects $3,500 cash for the selling price of the computer and $648 for the two - year service contract. How is revenue recognized? O A. Complete will record Sales Revenue of $3.500 when the computer delivered and will record revenue for the service contract as service calls are made. O B. Complete will record Sales Revenue of $2,074 per year for two years. O C. Complete will record Sales Revenue of $4,148 when the computer is delivered to the customer. O D. Complețe will record Sales Revenue of $3,500 when the computer is delivered and Service Revenue of $27 per month for 24 months.
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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 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 11,200 points and sold additional product of $140,000, so it recorded of revenue of $151, 200. 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.…
5. MASAKIT SA BUNGO CORPORATION operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2019, the entity issued 50,000 award credits. The fair value of the award credits is reliably measured at P2,000,000. In 2019, the entity sold goods to customers for a total consideration of P9,000,000 including the fair value of the award credits. The total award credits expected to be redeemed are 80% in 2019 and 85% in 2020. The award credits actually redeemed are 15,000 in 2019 and 7,950 in 2020. What is the revenue earned from points in 202O? * a. P600,000 b. P750,000 c. P330,000 d. P318,000
Garrett Corporation began operations in 2021. To maintain its accounting records, Garrett entered into a two-year agreement with Accurite Company. The agreement specifies that Garrett will pay $85,000 to Accurite immediately, and in return, Accurite will make its accounting software accessible via the Internet to Garrett and maintain all infrastructure necessary to run the software and store records. At any time, Garrett Corporation can freely remove its records and run the software on its own hardware or that of another accounting services company. In addition to the cost of the agreement, Garrett incurred $15,000 early in the year devising a plan for its accounting software needs, $25,000 for customizing its own computers for integration with Accurite’s software, and $20,000 after the software was implemented to train its employees. Determine the initial amount that Garrett should capitalize related to the software development costs.
Company X orders raw materials for EUR 1,000 and manages to obtain a discount of 15% from one of its suppliers. Once raw materials are received, defaults are noted by the warehouse manager. Company X intends a lawsuit against its supplier. Company C's lawyer estimates that Company C might be entitled to receive EUR 200. Decision from the court: the supplier needs to grant a rebate of EUR 150. Prepare the accounting journal entries for the purchase, for the suit and the rebate at the level of Company C.
Comfy Home sells gift cards which can be loaded with any amount greater than $10, in increments of $5. Which of the following statements best describes the nature of gift card sales? Gift cards represent an asset because the company is entitled to receive revenues from future sales that will be paid for with gift cards. Gift cards represent an asset because the company will get to keep the cash from all gift cards that expire before they are redeemed. O Gift cards represent a liability because the company has an obligation to provide goods to customers at a future date. Gift cards represent owners' equity because the company can recognize revenue as soon as the gift cards are sold.
Bonnie Corp. sells a machine to a customer for $18,000 and uses the Installment Sales Method to account for the sale. The cost of the goods was $12,400. At the date of sale, Bonnie delivers the machine and receives $4,500, with the remainder being an installment account receivable for $13,500. How much gross profit should Bonnie recognize at the date of delivery? Do not use commas, dollar symbols (e.g. $), units or spaces in your answers. For example, one thousand five hundred and twenty-three dollars should be entered as 1523. If the Canvas system inserts a comma for you, don't worry about it.
purchased, but do not earn additional loyalty points 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 11,400 points and sold additional product of $142,500, so it recorded of revenue of $153,900. The aggregate stand-alone selling price of the purchased products is $153,900. 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 $68,400 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.