Analyzing Unearned Revenue Disclosures $($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 fiscal $2018$ to compute the cash that Costco

received during fiscal $2018$ for membership fees.

Total cash received $($in $ millions$)=$$

$($c$)$ Use the financial statement effects template to show the effect of the cash Costco received during fiscal $2018$ for membership fees and the recognition of membership fees revenue for fiscal $2018.$

Use negative signs with answers, when appropriate.

$($e$)$ Complete the following sentences:

Costco recorded sales of at least $

million from the Company's Executive members, during fiscal $2018.$

The following disclosures $($excerpted$)$ are from the September $2,2018,$ annual report of Costco Wholesale Corporation.

revenue, net of refunds, on a deferred basis, ratably over the one$-$year membership.

estimated impact of non$-$redemptions, based on historical data. The net reduction in sales was $$1,394,$$$1,281,$ and $$1,172$ in $2018,2017,$ and $2016,$ respectively.

$($a$)$ Which of the following statements best explains in layman terms how Costco accounts for the cash received for its membership fees?

When it receives cash, the company records it as a current liability. Then, it recognizes revenue evenly over the year.

The company records revenue when the cash is received.

Because Costco has a refund policy, the company records revenue when the cash is received, less an allowance for expected membership terminations.