Revenue Recognition and Sales Allowances

Target Corporation reported the following on its income statement.

The revenue recognition footnote from the $10-K$ 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 years ended February $2019,2018,$ 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. customers each year?

Note: Round percentage to one decimal place $($for example, enter $6\mathrm{.}7\%$ for $6\mathrm{.}6555\%).$

Does the loyalty program seem to be working?

Please answer all parts of the question. 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.