XYZ Ltd. is a health foods distributor and retailer initiated a customer loyalty program that offers member points to redeem a bottle of its ‘X-Premium’ wine. The premium wine costs the company $30 per bottle and retails for $80 per bottle.

Points are issued only during the month of December 20x0 and the redemption period is valid until February 20x1. Every $10 dollars spent in December will entitle the customer one point, and a bottle of the premium wine may be redeemed without cost with 100 points.

December sales amounted to $210,560 and 21,000 points were issued. XYZ expects 80% if the points to be redeemed. At the end of December 20x0, 10,000 points were used for redemption. 4,000 and 2,000 points were redeemed in January and February respectively.

Required:

a) Prepare the Journal entries to record the sales in December, January and February 20X1.

b) Discuss what if in February, 3,000 points were redeemed instead?

Answer rating: 100% (QA)

Journal entries to record the sales in December January and February 20X1 To... View the full answer