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 redeem loyalty points on $96,000 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
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 redeem loyalty points on $96,000 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 18E: On December 1, 2019, AwakcAllNight Inc. sells 5,000 super caffeinated candy bars to Campus Grocers....
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Transcribed Image Text: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 redeem loyalty points on
$96,000 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales. (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
General Journal
Debit
Credit
Record entry
Clear entry
View general journal
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