Matcha Tea House Ltd. opened for business on January 1, 2023. Matcha Tea House provides a customer
Question:
Matcha Tea House Ltd. opened for business on January 1, 2023. Matcha Tea House provides a customer reward program through use of a plastic key tag. If the customer buys 5 teas, their 6th tea is free. Customers pay $4.50 for a cup of tea. Matcha Tea House reports under IFRS and tea sales are material. In January, 4,500 cups of tea were served. 4,320 were sold and 180 free cups of tea were redeemed so far under Matcha Tea’s loyalty program. Based on industry data, 66 2/3% of all customers rewards will be redeemed for free tea under Matcha Tea House’s program.
Required:
a) What is the TOTAL revenue recorded by Matcha Tea House for January 2023?
b) What is the liability recorded relating to this program at January 31, 2023?
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson