The following disclosures are from the August 31, 2008, annual report of Costco Wholesale Corporation.

Revenue Recognition Membership fee revenue represents annual membership fees paid by substantially all of the Company's members. The Company accounts for membership fee revenue on a deferred basis, whereby revenue is recognized ratably over the one-year term of the membership period.

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a. Explain in layman terms how Costco accounts for the cash received for its membership fees.

b. Use the balance sheet information on Costco's Deferred Membership Fees liability account and its income statement revenues related to Membership Fees earned during 2008 to compute the cash that Costco received during 2008 for membership fees.

c. Use the financial statement effects template to show the effect of the cash Costco received during 2008 for membership fees and the recognition of membership fees revenue for 2008.

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Current Liabilities ($ thousands) Short-term borrowings.... Accounts payable...... Accrued salaries and benefits Accrued sales and other taxes. Deferred membership fees.. Current portion long-term debt Other current liabilities... Total current liabilities.. August 31, 2008 $134,409 5,224,753 1,320,715 September 2, 2007 $53,832 5,124,990 1,226,666 283,048 748,438 267,920 692,176 6,003 59,905 1,156,799 1,156,264 $8,874.165 $8,581,753