Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Need answers asap!! Revenue Recognition and Sales Allowances Target Corporation reported the following on its income statement. The revenue recognition footnote from the 10K for
Need answers asap!!
Revenue Recognition and Sales Allowances Target Corporation reported the following on its income statement. The revenue recognition footnote from the 10K for the year ended February 2, 2019, includes the following. - We record almost all retail store revenues at the point of sale. - Digital channel sales include shipping revenue and are recorded upon delivery to the guest or upon guest pickup at the store. - Total revenues do not include sales tax because we are a pass-through conduit for collecting and remitting sales taxes. - Generally, guests may return national brand merchandise within 90 days of purchase and owned and exclusive brands within one year of purchase. Revenues are recognized net of expected returns, which we estimate using historical return patterns as a percentage of sales and our expectations of future returns. - Revenue from gift card sales is recognized upon gift card redemption. Our gift cards do not expire. Based on historical redemption rates, a small and relatively stable percentage of gift cards will never be redeemed, referred to as "breakage." Estimated breakage revenue is recognized over time in proportion to actual gift card redemptions. - Guests receive a 5 percent discount on virtually all purchases and receive free shipping at Target.com when they use their REDcard. This discount is included as a sales reduction in our Consolidated Statements of Operations and was $953 million, $933 million, and $899 million in the fiscal and 2017 respectively. Required a. Use the financial statement effects template to record retail cash sales of $1,000 in a state with a sales tax rate of 8%. For this question, assume 10% of all merchandise sold is returned within 90 days. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. b. Use the financial statement effects template to record the following transaction: On March 4, an internet customer places an order $2,000 and pays online with a credit card (which is equivalent to cash for accounting purposes). The goods are shipped from the warehouse on March 6 , and FedEx confirms delivery on March 7. Ignore shipping costs, sales tax, and returns. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. a. Use the financial statement effects template to record retail cash sales of $1,000 in a state with a sales tax rate of 8%. For this question, assume 10% of all merchandise sold is returned within 90 days. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. b. Use the financial statement effects template to record the following transaction: On March 4, an internet customer places an order for $2,000 and pays online with a credit card (which is equivalent to cash for accounting purposes). The goods are shipped from the warehouse on March 6, and FedEx confirms delivery on March 7. Ignore shipping costs, sales tax, and returns. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. c. Use the financial statement effects template to record the gift card activity during the fiscal year ended February 2, 2019 . Ignore sales tax and returns. Details are as follows. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. d. Determine the amount of revenue Target collected from customers who used their loyalty card (REDcard"M for each of the fiscal years reported above. What proportion of total revenues come from REDcard IM customers each year? Note: Round percentage to one decimal place (for example, enter 6.7% for 6.6555% ). c. Use the financial statement effects template to record the gift card activity during the fiscal year ended February 2,2019. as follows. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. d. Determine the amount of revenue Target collected from customers who used their loyalty card (REDcard mi ) for each of the fiscal years reported above. What proportion of total revenues come from REDcard 19 customers each year? Note: Round percentage to one decimal place (for example, enter 6.7% for 6.6555% ). Revenue Recognition and Sales Allowances Target Corporation reported the following on its income statement. The revenue recognition footnote from the 10K for the year ended February 2, 2019, includes the following. - We record almost all retail store revenues at the point of sale. - Digital channel sales include shipping revenue and are recorded upon delivery to the guest or upon guest pickup at the store. - Total revenues do not include sales tax because we are a pass-through conduit for collecting and remitting sales taxes. - Generally, guests may return national brand merchandise within 90 days of purchase and owned and exclusive brands within one year of purchase. Revenues are recognized net of expected returns, which we estimate using historical return patterns as a percentage of sales and our expectations of future returns. - Revenue from gift card sales is recognized upon gift card redemption. Our gift cards do not expire. Based on historical redemption rates, a small and relatively stable percentage of gift cards will never be redeemed, referred to as "breakage." Estimated breakage revenue is recognized over time in proportion to actual gift card redemptions. - Guests receive a 5 percent discount on virtually all purchases and receive free shipping at Target.com when they use their REDcard. This discount is included as a sales reduction in our Consolidated Statements of Operations and was $953 million, $933 million, and $899 million in the fiscal and 2017 respectively. Required a. Use the financial statement effects template to record retail cash sales of $1,000 in a state with a sales tax rate of 8%. For this question, assume 10% of all merchandise sold is returned within 90 days. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. b. Use the financial statement effects template to record the following transaction: On March 4, an internet customer places an order $2,000 and pays online with a credit card (which is equivalent to cash for accounting purposes). The goods are shipped from the warehouse on March 6 , and FedEx confirms delivery on March 7. Ignore shipping costs, sales tax, and returns. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. a. Use the financial statement effects template to record retail cash sales of $1,000 in a state with a sales tax rate of 8%. For this question, assume 10% of all merchandise sold is returned within 90 days. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. b. Use the financial statement effects template to record the following transaction: On March 4, an internet customer places an order for $2,000 and pays online with a credit card (which is equivalent to cash for accounting purposes). The goods are shipped from the warehouse on March 6, and FedEx confirms delivery on March 7. Ignore shipping costs, sales tax, and returns. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. c. Use the financial statement effects template to record the gift card activity during the fiscal year ended February 2, 2019 . Ignore sales tax and returns. Details are as follows. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. d. Determine the amount of revenue Target collected from customers who used their loyalty card (REDcard"M for each of the fiscal years reported above. What proportion of total revenues come from REDcard IM customers each year? Note: Round percentage to one decimal place (for example, enter 6.7% for 6.6555% ). c. Use the financial statement effects template to record the gift card activity during the fiscal year ended February 2,2019. as follows. Note: For each account category, indicate the appropriate account name. Enter "N/A" for any account category that is not used for a given transaction. Note: Indicate a decrease in an account category by including a negative sign with the amount. d. Determine the amount of revenue Target collected from customers who used their loyalty card (REDcard mi ) for each of the fiscal years reported above. What proportion of total revenues come from REDcard 19 customers each year? Note: Round percentage to one decimal place (for example, enter 6.7% for 6.6555% )Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started