Question
Shoes on First sells a variety of footwear products. During July 2016 it started a loyalty program through which qualifying customers can accumulate points and
Shoes on First sells a variety of footwear products. During July 2016 it started a loyalty program through which qualifying customers can accumulate points and redeem those points for discounts on future purchases. Redemption of a loyalty point reduces the price of one dollar of future purchases by 10% (equal to 10 cents). Customers do not earn additional loyalty points for purchases on which loyalty points are redeemed. Based on past experience, Shoes on First estimates a 60% probability that any point issued will be redeemed for the discount. During July 2016, the company sells shoes for $150,000 and awards 300,000 loyalty points. The aggregate stand-alone selling price of the purchased products is $150,000. Eighty percent of sales were cash sales and the remainder were credit sales.
- Prepare Shoes on Firsts journal entry to record July sales (ignore COGS and round to the nearest dollar).
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