William Company operates a customer loyalty program. T entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchan for goods of the entity. The points have no expiry date. During 2020, the entity issued 100,000 award credits and expects that 80% of these award credits shall be redeemed The total stand-alone selling price of the award credits granted is reliably measured at P2,000,000. In 2020, the entity sold goods to customers for a total consideration of P8,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be redeemed 2020 2021 30,000 15,000 80% 90% 1. What is the revenue from points for 2020? 1,600,000 b. 1,500,000 600,000 a. C. AS0 000

William Company operates a customer loyalty program. T entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchan for goods of the entity. The points have no expiry date. During 2020, the entity issued 100,000 award credits and expects that 80% of these award credits shall be redeemed The total stand-alone selling price of the award credits granted is reliably measured at P2,000,000. In 2020, the entity sold goods to customers for a total consideration of P8,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be redeemed 2020 2021 30,000 15,000 80% 90% 1. What is the revenue from points for 2020? 1,600,000 b. 1,500,000 600,000 a. C. AS0 000

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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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
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.
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