Question
Performance Obligations The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or services. The Company recognizes revenue when (or as)
Performance Obligations The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or services. The Company recognizes revenue when (or as) ii satisfies a performance obligation by transferring control of the goods or services to the customer. Merchandise sales- The Company recognizes sale of merchandise at clubs and gas stations at the point of sale when the customer takes possession of the goods and tenders payment. BJ's Perks Rewards-The Company has a customer loyalty program called the BJ's Perks Rewards Program for which the Company offers points based on dollars spent by the customer. The Company also has a co-branded credit card program which provides members additional reward dollars for certain purchases. The Company's BJ's Perks Rewards members earn 2% cash back, up to a maximum of $500 per year, on all qualified purchases made at BJ's. The Company's My BJ's Perks Mastercard holders earn 3% or 5% cash back on all qualified purchases made at BJ's and 1% or 2% cash back on purchases made with the card outside of BJ's. Cash back is in the form of electronic awards issued in $20 increments that may be used online or in-club at the register and expire six months from the date issued. Earned rewards may be redeemed on future purchases made at the Company. The Company recognizes revenue for earned rewards when customers redeem such rewards as part of a purchase at one of the Company's clubs or the Company's website. The Company accounts for these transactions as multiple element arrangements and allocates the transaction price to separate performance obligations using their relative fair values. The Company includes the fair value of reward dollars earned in deferred revenue at the time the reward dollars are earned. Membership-The Company charges a membership fee to its customers. That fee allows customers to shop in the Company's clubs, shop on the Company's website, and purchase gas at the Company's gas stations for the duration of the membership, which is 12 months. Because the Company has the obligation to provide access to its clubs, website, and gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership. The following data were extracted from income statement, balance sheet, and footnotes of BJ's 10-Q report for the second quarter of 2018:
Twenty-six weeks ended August 4, 2018
Net sa les $6,230.4 Membership fee income ......... . ...................138.4 Total revenues ..................... . ............ .6,368.8 Deferred revenue-membership fees .................. January 28,2018. $126.2 August 4, 2018 ---------------$ 129.9
a. Explain BJ's accounting for membership fees. b. Prepare journal entries to record (I) membership fees collected in cash in the first half of fiscal year 2018 and (2) membership fee revenue recognized over that period. c. Explain BJ's accounting for its BJ's Perks Rewards program that provides 2% cash back, up to a maximum of $500 per year on qualified purchases made at BJ's.
NYSEB The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or ser- vices. The Company recognizes revenue when for as) it satisfies a performance obligation by transferring control of the goods or services to the customer. Merchandise salesThe Company recognizes sale of merchandise at clubs and gas stations at the point of sale when the customer takes possession of the goods and tenders payment BJ's Perks Rewards-The Company has a customer loyalty program called the BJ's Perks Rewards Pro- gram for which the Company offers points based on dollars spent by the customer. The Company also has a co-branded credit card program which provides members additional reward dollars for certain purchases. The Company's BJ's Perks Rewards members earn 2% cash back, up to a maximum of $500 per year, apter 6 Reporting and Analyzing Revenues, Receivables, and Operating Income Cambridge Business Publishers on all qualified purchases made at BJ's. The Company's My Bu's Perks Mastercard holders earn 3% or 5% cash back on all qualified purchases made at BJ's and 1% or 2% cash back on purchases made with the card outside of Bu's. Cash back is in the form of electronic awards issued in $20 increments that may be used online or in-club at the register and expire six months from the date issued. Earned rewards may be redeemed on future purchases made at the Company. The Company recognizes revenue for earned rewards when customers redeem such rewards as part of a purchase at one of the Company's clubs or the Company's website. The Company accounts for these transactions as multiple element arrangements and allocates the transaction price to separate performance obligations using their relative fair values. The Company includes the fair value of reward dollars eared in deferred revenue at the time the reward dollars are earned. Membership-The Company charges a membership fee to its customers. That tee allows customers to shop in the Company's clubs, shop on the Company's website, and purchase gas at the Company's gas stations for the duration of the membership which is 12 months. Because the Company has the obligation to provide access to its clubs, website, and gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership. The following data were extracted from income statement, balance sheet, and footnotes of BJ's 10-Q report for the second quarter of 2018: (S millions) Net sales Membership fee income Total revenues Twenty-six weeks ended August 4, 2018 $6,230.4 138.4 6,368.8 January 28, 2017 August 4, 2018 Deferred revenue-membership fees $ 129.9 $126.2 NYSEB The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or ser- vices. The Company recognizes revenue when for as) it satisfies a performance obligation by transferring control of the goods or services to the customer. Merchandise salesThe Company recognizes sale of merchandise at clubs and gas stations at the point of sale when the customer takes possession of the goods and tenders payment BJ's Perks Rewards-The Company has a customer loyalty program called the BJ's Perks Rewards Pro- gram for which the Company offers points based on dollars spent by the customer. The Company also has a co-branded credit card program which provides members additional reward dollars for certain purchases. The Company's BJ's Perks Rewards members earn 2% cash back, up to a maximum of $500 per year, apter 6 Reporting and Analyzing Revenues, Receivables, and Operating Income Cambridge Business Publishers on all qualified purchases made at BJ's. The Company's My Bu's Perks Mastercard holders earn 3% or 5% cash back on all qualified purchases made at BJ's and 1% or 2% cash back on purchases made with the card outside of Bu's. Cash back is in the form of electronic awards issued in $20 increments that may be used online or in-club at the register and expire six months from the date issued. Earned rewards may be redeemed on future purchases made at the Company. The Company recognizes revenue for earned rewards when customers redeem such rewards as part of a purchase at one of the Company's clubs or the Company's website. The Company accounts for these transactions as multiple element arrangements and allocates the transaction price to separate performance obligations using their relative fair values. The Company includes the fair value of reward dollars eared in deferred revenue at the time the reward dollars are earned. Membership-The Company charges a membership fee to its customers. That tee allows customers to shop in the Company's clubs, shop on the Company's website, and purchase gas at the Company's gas stations for the duration of the membership which is 12 months. Because the Company has the obligation to provide access to its clubs, website, and gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership. The following data were extracted from income statement, balance sheet, and footnotes of BJ's 10-Q report for the second quarter of 2018: (S millions) Net sales Membership fee income Total revenues Twenty-six weeks ended August 4, 2018 $6,230.4 138.4 6,368.8 January 28, 2017 August 4, 2018 Deferred revenue-membership fees $ 129.9 $126.2Step by Step Solution
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