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. Required: 1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on $67,200 of merchandise. Seventy-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. No 1 2 Transaction 1 2 Answer is not complete. General Journal Cash Accounts receivable Deferred revenue - loyalty points Sales revenue Service revenue Accounts receivable Deferred revenue - loyalty points Cash 3333 **** Debit 120,960✔ 30,240 67,200 x Credit 2,240 x 140,000 X 67,200 x
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. Required: 1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on $67,200 of merchandise. Seventy-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. No 1 2 Transaction 1 2 Answer is not complete. General Journal Cash Accounts receivable Deferred revenue - loyalty points Sales revenue Service revenue Accounts receivable Deferred revenue - loyalty points Cash 3333 **** Debit 120,960✔ 30,240 67,200 x Credit 2,240 x 140,000 X 67,200 x
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 13RE: CoolShoes sells its elite tennis shoes to sports retailers throughout the country. When introducing...
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Transcribed Image Text: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.
Required:
1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on
$67,200 of merchandise. Seventy-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.
No
1
2
Transaction
1
2
X Answer is not complete.
General Journal
Cash
Accounts receivable
Deferred revenue - loyalty points
Sales revenue
Service revenue
Accounts receivable
Deferred revenue - loyalty points
Cash
XX
Debit
120,960
30,240
67,200
Credit
2,240 X
140,000 X
67,200
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