ACCT 221

Save-Always Stores started a customer loyalty program at the beginning of 2020 in which customers making cash purchases of gasoline at Save-Always Gas Bars are issued rewards in the form of grocery coupons. For each litre of gasoline purchased, the customer gets a grocery coupon for 3.40 cents that can be redeemed in Save-Always Food Stores. The coupons have no expiry date. Save-Always Stores began selling gift cards in 2021 that do not have expiry dates. The following are selected transactions in 2020 and 2021: 1. 2. 3. In 2020, the Gas Bars sold 3.60 million litres of gasoline resulting in gas sales of $4,320,000. Grocery coupons were issued with these sales. The expected redemption rate for the grocery coupons is 75%. In 2020, customers redeemed $50,800 of the grocery coupons in the Food Stores. In 2021, the Gas Bars sold 4.35 million litres of gasoline resulting in gas sales of $5,655,000. Grocery coupons were issued with these sales. The expected redemption rate for the grocery coupons is 72%. In 2021, customers redeemed $58,300 of the grocery coupons in the Food Stores. In 2021, customers purchased $91,600 of gift cards, and $49,800 of the revenue from gift card sales was to be recorded by the end of the year. 4. 5. Indicate if the following activities will increase, decrease, or have no effect on each of revenues, expenses, and profit: 1. Issuing grocery coupons when sales are made 3. Issuing gift cards 4. 3. Issuing gift cards 4.