Prepare Supply Club’s journal entry to record July and August sales. During August, customers redeem loyalty points on $79,200 of merchandise. Sixty-five percent of those sales were for cash, and the remainder were credit sales.
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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 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 2021, the company redeemed 13,200 points and sold additional product of $165,000, so it recorded $178,200 of revenue. The aggregate stand-alone selling price of the purchased products is $178,200. Seventy percent of sales were cash sales, and the remainder were credit sales.
1. & 2. Prepare Supply Club’s
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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 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 2021, the company redeemed 10,200 points and sold additional product of $127,500, so it recorded $137,700 of revenue. The aggregate stand-alone selling price of the purchased products is $137,700. 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…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…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 2021, the company redeemed 13,800 points and sold additional product of $172,500, so it recorded $186,300 of revenue. 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…
- Supply Club, Inc., sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2021 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 80% probability that any point issued will be redeemed for the discount. During July 2021, the company records $136,000 of revenue and awards 150,000 loyalty points. The aggregate stand-alone selling price of the purchased products is $136,000. Seventy-five 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…During February 2020, Buffalo Massage Ltd. sells $12,000 of gift cards for Valentine's Day gifts. From reliable past experience, management estimates that 10% of the gift cards sold will not be redeemed. By the end of February, $3,000 was redeemed by customers. Prepare the journal entries for Buffalo Massage for February 2020. (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.)In Lizzie Shoes’ experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. Lizzie Shoes sold gift cards for $18,000 during August 2021. $4,000 of cards were redeemed in September 2021, $3,000 in October, $2,500 in November, and $2,000 in December 2021. In 2022 an additional $1,000 of cards were redeemed in January and $500 in February. How much gift card revenue associated with the August 2021 gift card sales would Lizzie get to recognize in 2021 and 2022?
- In Lizzie Shoes’ experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. Lizzie Shoes sold gift cards for $19,150 during August 2021. $3,400 of cards were redeemed in September 2021, $3,610 in October, $2,750 in November, and $2,670 in December 2021. In 2022 an additional $1,850 of cards were redeemed in January and $535 in February.How much gift card revenue associated with the August 2021 gift card sales would Lizzie get to recognize in 2021 and 2022?Layaway plans allow you, for a fee, to pay for an item over a period of time and then receive the item when you finish paying for it. In November 2011, Senator Charles E. Schumer of New York warned that the holiday layaway programs recently reinstated by several popular retailers were, when you took the fees into account, charging interest at a rate significantly higher than the highest credit card rates.† Suppose that you bought a $66 item on November 15 on layaway, with the final payment due December 15, and that the retailer charged you a $5 service feeIn Lizzie Shoes’ experience, gift cards that have not been redeemed within 12 months are not likely to beredeemed. Lizzie Shoes sold gift cards for $18,000 during August 2018. $4,000 of cards were redeemed inSeptember 2018, $3,000 in October, $2,500 in November, and $2,000 in December 2018. In 2019 an additional$1,000 of cards were redeemed in January and $500 in February. How much gift card revenue associated withthe August 2018 gift card sales would Lizzie get to recognize in 2018 and 2019?
- ABC Company runs a department store and grants loyalty awards to its customers. For every P 100 purchase made by the customer, the customer receives a credit of 5 points equivalent to P 5. The accumulated points can be used by the customer to as part or full payment of for merchandise purchased in the future. During the year 2019, the company made sales of P 10,000,000. The fair value of the points is equivalent to the total number of points awarded during the year. For the year 2019, ABC expects that 70,000 points will be redeemed but only 65,000 points were redeemed relating to 2019 sales. For the year 2020, an additional 20,000 points were redeemed and ABC revised its estimate that only 10,000 points granted in 2019 will be redeemed as of December 31,2020. How much revenue is recognized as a result of the redemption of points for the year 2020?ABC Company runs a department store and grants loyalty awards to its customers. For every P 100 purchase made by the customer, the customer receives a credit of 5 points equivalent to P 5. The accumulated points can be used by the customer to as part or full payment of for merchandise purchased in the future.During the year 2019, the company made sales of P 10,000,000. The fair value of the points is equivalent to the total number of points awarded during the year. For the year 2019, ABC expects that 70,000 points will be redeemed but only 65,000 points were redeemed relating to 2019 sales. For the year 2020, an additional 20,000 points were redeemed and ABC revised its estimate that the total number of points that will be redeemed is 90,000 points.How much revenue is recognized as a result of the redemption of points for the year 2020?Caleb’s Body Shop is a gym that sells annual memberships for $1,200. Each membership sold includes 12 coupons for $1 off at the gym’s juice bar—the coupons are similar to gift cards. (When a gym membership is sold, therefore, the gym is obligated to provide two different services.) However, past experience shows that only 50% of the coupons are actually redeemed. State which accounts should be debited and credited, for how much, and explain why. Give the journal entry to record the sale of one membership