Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Supply Club, Inc., sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2016 it started

Supply Club, Inc., sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. 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 20% (equal to 20 cents). Customers do not earn additional loyalty points for purchases on which loyalty points are redeemed. Based on past experience, Supply Club estimates a 55% probability that any point issued will be redeemed for the discount. During July 2016, the company records $187,000 of revenue and awards 300,000 loyalty points. The aggregate stand-alone selling price of the purchased products is $187,000. Seventy-five percent of sales were cash sales, and the remainder were credit sales.

Required:

1. & 2.

Prepare Supply Clubs journal entry to record July and August sales. During August, customers redeem 132,000 loyalty points on merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales. (Do not round intermediate calculations. If no entry is required for a particular transaction/event, select "No journal entry required" in the first account field.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Compliance Audits And Plans For Healthcare

Authors: Cherilyn G. Murer, Michael A. Murer, Lyndean Lenhoff Brick, Healthcare Financial Management Association (U. S.)

1st Edition

0070444625, 978-0070444621

More Books

Students also viewed these Accounting questions