Answered: Note: Carryall decimals in…

Note: Carryall decimals in calculations; round the final answer to the nearest dollar. Performance Obligations Product purchase S Loyalty rewards Total Transaction 280 1 Transaction Price

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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Allocating Transaction Price to Performance Obligations and Recording Sales Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $280) for cash at the usual selling price of $400 and earns 400 points redeemable for $80 off future purchases of goods or services. The retailer expects redemption of 360 points or 90% of points earned. a. How should the transaction price be allocated among the performance obligation(s)?Note: Round each allocated transaction price in the table below to the nearest dollar. Performance Obligations TransactionPriceas Stated StandaloneSellingPrice AllocatedTransaction Price(rounded) Product purchase Answer Answer Answer Loyalty rewards Answer Answer Answer Answer Answer Answer b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400…
Sammy John Ltd has a customer loyalty programme that rewards a customer with one customer loyalty point for every $10 of purchases. Each point is redeemable for a $1 discount on any future purchases Customers purchase products for $100,000 and earn 10,000 points The entity expects 9,500 points to be redeemed, so they have a stand-alone selling price $9,500 Identify the steps in the revenue recognition process match the steps to the relevant process in the case above to describe how it will be dealt with under IFRS 15?
Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $280) for cash at the usual selling price of $400 and earns 400 points redeemable for $80 off future purchases of goods or services. The retailer expects redemption of 360 points or 90% of points earned. a.) How should the transaction price be allocated among the performance obligation(s)?Note: Round each allocated transaction price in the table below to the nearest dollar. b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400 loyalty points.
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.
1. How should the $25 Referral Credit be recorded in Runway’s incomestatement?2. When would Runway record the $25 Referral Credit? What are the journalentries Runway would record when the $25 Referral Credit is earned bythe Existing Customer? What are the journal entries Runway would recordwhen the $25 Referral Credit is redeemed against a $100 purchase madeby the Existing Customer?3. Runway is planning to adopt IFRSs in the near future. What is the relevantaccounting guidance it would follow under IFRSs?
(Customer Loyalty Program) Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2017, customers purchase products for $300,000 (with a cost of $171,000) and earn 30,000 points redeemable for future purchases. Martz expects 25,000 points to be redeemed. Martz estimates a standalone selling price of $2.50 per point (or $75,000 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Martz concludes that the points are a separate performance obligation.Instructions(a) Determine the transaction price for the product and the customer loyalty points.(b) Prepare the journal entries to record the sale of the product and related points on July 2, 2017.(c) At the end of the first reporting period (July 31, 2017), 10,000 loyalty…
Supply Club, Inc., sells a variety of paper products, office supplies, and other products used by businesses andindividual consumers. During July 2018 it started a loyalty program through which qualifying customers canaccumulate points and redeem those points for discounts on future purchases. Redemption of a loyalty pointreduces the price of one dollar of future purchases by 20% (equal to 20 cents). Customers do not earn additionalloyalty 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 2018, the companyrecords $135,000 of revenue and awards 125,000 loyalty points. The aggregate stand-alone selling price of thepurchased products is $135,000. Eighty percent of sales were cash sales, and the remainder were credit sales.Required:1. Prepare Supply Club’s journal entry to record July sales.2. During August, customers redeem loyalty points on…
Computers and More offers discounts to its customers and allows the customer to return the product if not satisfied. Computers and More had sales of $850,000 and offers the customer a payment term of 3/12 n/30. The company received $15,000 in returned goods. The cost of goods sold for the period after returns was $320,000. Calculate net profit and gross profit.
Part B. Beaver Limited is a retail company that sells sporting goods. The company has a customer loyalty program that allows customers to earn points based on sales made. These points can be accumulated and used for future purchases. One customer loyalty point is awarded for every $1 of purchases. During March 2023, the company recorded sales of $1,725,000 to customers who were accumulating points. The stand-alone value of these goods sold was $1,725,000. Beaver has also determined that each point has a fair value of $0.017. Required: a. What are the two performance obligations? b. Sale of Goods c. Customer Loyalty Program 1. Allocate the sales price of $1,725,000 to the two performance obligations Allocation to Performance obligation 1: $ Allocation to performance obligation 2: $ 2. Prepare the entry to record the sales (all cash) for the month of March 2023. Cash Revenue Loyalty Liability Debit 1,725,000 Credit
Use the information for the next three (3) questions. Seva Company operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on purchases. Program members can redeem the points for further purchases. The points have no expiry date.During 2020, the customer earned 60,000 points. Management expects that 100% of these points will be redeemed. The stand-alone selling price of each loyalty point is estimated at P20. The sales during 2020 amounted to P6,800,000 based on stand-alone selling price.On December 31, 2020, 28,800 points have been redeemed in exchange for purchases.In 2021, the management revised expectations and now expects 90% of the points to be redeemed. 9,000 points were redeemed during the year.How much of the sales should be allocated to the award points? How much should be recognized as revenue for 2020? How much should be recognized as revenue for 2021?
A retailer purchases merchandise with a catalog list price of $34,900. The retailer receives a 24% trade discount and has credit terms of 2/10, n/30. How much cash will be needed to pay this invoice within the discount period (Round your answer to the nearest dollar)?
Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2020, customers purchase products for $300,000 (with a cost of $171,000) and earn 30,000 points redeemable for future purchases. Martz expects 25,000 points to be redeemed. Martz estimates a standalone selling price of $2.50 per point (or $75,000 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Martz concludes that the points are a separate performance obligation. Instructions a. Determine the transaction price for the product and the customer loyalty points. b. Prepare the journal entries to record the sale of the product and related points on July 2, 2020. c. At the end of the first reporting period (July 31, 2020), 10,000 loyalty points are…