To increase sales, Pharoah Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $30 of merchandise purchased. Each point is redeemable for a $2.50 discount on any purchases of Pharoah merchandise in the next three years. After the program launched, during 2023, customers bought merchandise for $300,000 (all products are sold to provide a 30% gross profit) and earned 10,000 points redeemable for future purchases. The stand-alone selling price of the merchandise sold is $300,000. Based on prior experience with incentive programs like this, Pharoah expects 8,000 points to be redeemed related to these sales. (b) Prepare the journal entries for cash sales including the issuance of loyalty points for Pharoah in 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round percentage allocations to 2 decimal places, e.g. 52.75% and final answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit (To record cash sales of products subject to loyalty points) (To record cost of goods sold)
To increase sales, Pharoah Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer with one loyalty point for every $30 of merchandise purchased. Each point is redeemable for a $2.50 discount on any purchases of Pharoah merchandise in the next three years. After the program launched, during 2023, customers bought merchandise for $300,000 (all products are sold to provide a 30% gross profit) and earned 10,000 points redeemable for future purchases. The stand-alone selling price of the merchandise sold is $300,000. Based on prior experience with incentive programs like this, Pharoah expects 8,000 points to be redeemed related to these sales. (b) Prepare the journal entries for cash sales including the issuance of loyalty points for Pharoah in 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Round percentage allocations to 2 decimal places, e.g. 52.75% and final answers to O decimal places, e.g. 5,275. List all debit entries before credit entries.) Account Titles and Explanation Debit Credit (To record cash sales of products subject to loyalty points) (To record cost of goods sold)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:To increase sales, Pharoah Inc., a public company following IFRS, implemented a customer loyalty program that rewards a customer
with one loyalty point for every $30 of merchandise purchased. Each point is redeemable for a $2.50 discount on any purchases of
Pharoah merchandise in the next three years. After the program launched, during 2023, customers bought merchandise for $300,000
(all products are sold to provide a 30% gross profit) and earned 10,000 points redeemable for future purchases. The stand-alone
selling price of the merchandise sold is $300,000. Based on prior experience with incentive programs like this, Pharoah expects 8,000
points to be redeemed related to these sales.
(b)
Prepare the journal entries for cash sales including the issuance of loyalty points for Pharoah in 2023. (Credit account titles are
automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles
and enter O for the amounts. Round percentage allocations to 2 decimal places, e.g. 52.75% and final answers to O decimal places, e.g.
5,275. List all debit entries before credit entries.)
Account Titles and Explanation
Debit
Credit
(To record cash sales of products subject to loyalty points)
(To record cost of goods sold)
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