Note: Use negative signs with answers when appropriate.

Note: If an answer field is not needed, leave it blank $($not all answer fields will be used$).$

d$.$ Explain in plain language the "accrued member rewards" liability.

To build customer loyalty Costco offers $2\%$ reward to Executive members in certain countries. Every time an Executive member spends $$1,000,$ Costco records a liability of $

that it promises to give the customer later.

e$.$ Complete the following sentence. Costco recorded sales of at least $

from the Company's Executive members, during the current fiscal year.Analyzing Unearned Revenue Disclosures

The following disclosures $($excerpted$)$ are from the annual report of Costco Wholesale Corporation.

the consolidated balance sheets.

The Company is the principal for the majority of its transactions and recognizes revenue on a gross basis.

The Company accounts for membership fee revenue, net of refunds, on a deferred basis, ratably over the one$-$year membership period.

$$2,307,$$$2,047,$ and $$1,707$ respectively.

Required

a$.$ Explain in layman's terms how Costco accounts for the cash received for membership fees.

Costco receives cash for year$-$long memberships throughout the year. When it receives cash, the company records it as unearned revenue hat$()vv.$