Real People Sporting (RPS) Co-op introduced a loyalty program in 2020. Every customer who signed up would receive 1% of their total purchases as a

Question

76 users unlocked this solution today!

Real People Sporting (RPS) Co-op introduced a loyalty program in 2020. Every customer who signed up would receive 1% of their total purchases as a cheque, each February for the previous year, that could be used in-store on any merchandise within the next nine months. Customers could look online during the year and check their balance at any time. Laura signed up for the program in 2020, when she purchased a kayak in July for $1,000. Later, in September, she purchased a mountain bike for $2,300. In March 2021, she purchased a paddle board for $2,200 and used her cheque toward the purchase.

a. Prepare the journal entries for RPS Co-op for each of the transactions in July 2020, September 2020, and March 2021.

b. In 2020 RPS Co-op had a total of $482,000 in sales to customers who had signed up with the loyalty program. What is the amount of liability that would be created by these sales?