Supply Club, Inc., sells a variety of paper products, office supplies, and other products used by...

 

 

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Supply Club, Inc., sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2021 it started a loyalty program through which qualifying customers can accumulate points and redeem those points for discounts on future purchases. Redemption of a loyalty point reduces the price of one dollar of future purchases by 20% (equal to 20 cents). Customers do not earn additional loyalty points for purchases on which loyalty points are redeemed. Based on past experience, Supply Club estimates a 70% probability that any point issued will be redeemed for the discount. During July 2021, the company records $220,500 of revenue and awards 175,000 loyalty points. The aggregate stand-alone selling price of the purchased products is $220,500. Seventy percent of sales were cash sales, and the remainder were credit sales. Required: 1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on $98,000 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) X Answer is complete but not entirely correct. No Transaction General Journal Debit Credit 1 1 Cash 154,350 Accounts receivable 66,150 O Sales revenue 187,425 X Deferred revenue - loyalty points 33,075 X 35,000 x 98,000 X Cash Accounts receivable Deferred revenue - loyalty points 66,150 X Sales revenue 199,150 Supply Club, Inc., sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2021 it started a loyalty program through which qualifying customers can accumulate points and redeem those points for discounts on future purchases. Redemption of a loyalty point reduces the price of one dollar of future purchases by 20% (equal to 20 cents). Customers do not earn additional loyalty points for purchases on which loyalty points are redeemed. Based on past experience, Supply Club estimates a 70% probability that any point issued will be redeemed for the discount. During July 2021, the company records $220,500 of revenue and awards 175,000 loyalty points. The aggregate stand-alone selling price of the purchased products is $220,500. Seventy percent of sales were cash sales, and the remainder were credit sales. Required: 1. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem loyalty points on $98,000 of merchandise. Seventy-five percent of those sales were for cash, and the remainder were credit sales. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) X Answer is complete but not entirely correct. No Transaction General Journal Debit Credit 1 1 Cash 154,350 Accounts receivable 66,150 O Sales revenue 187,425 X Deferred revenue - loyalty points 33,075 X 35,000 x 98,000 X Cash Accounts receivable Deferred revenue - loyalty points 66,150 X Sales revenue 199,150

Answer rating: 100% (QA)

No Particular Debit Credit 1 Cash 22050090 154350 Accounts ... View the full answer