A grocery store provides third-party air travel reward points as an incentive for customers to shop at
Question:
A grocery store provides third-party air travel reward points as an incentive for customers to shop at the store. For each $20 spent, one "point" is credited to their account. How is the sales transaction accounted for with this rewards program?
A. A portion of the grocery transaction is recorded as an award claim liability, and the remaining amount is recorded as sales revenue.
B. The gross sale for groceries is recorded at the total transaction amount. A second expense transaction is recorded for the cost of purchasing the air travel points that will be allocated to the customer's air travel rewards account.
C. The gross sale is reported. There is no cost to the grocery store until the customer makes a claim for an award.
D. The sales net of the value of the air travel points are recorded.
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey