Question 4 Partially correct Mark 1.33 out of 2.00 Flag question Accounting for Membership Fees and...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Question 4 Partially correct Mark 1.33 out of 2.00 Flag question Accounting for Membership Fees and Rewards Program BJ's Wholesale Club Holdings, Inc. provides the following description of its revenue recognition policies for membership fees and its reward program. Performance Obligations The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or services. The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring control of the goods or services to the customer. Merchandise sales-The Company recognizes sale of merchandise at clubs and gas stations at the point of sale when the customer takes possession of the goods and tenders payment. BJ's Perks Rewards-The Company has a customer loyalty program called the BJ's Perks Rewards Program for which the Company offers points based on dollars spent by the customer. The Company also has a co-branded credit card program which provides members additional reward dollars for certain purchases. The Company's BJ's Perks Rewards members earn 2% cash back, up to a maximum of $500 per year, on all qualified purchases made at BJ's. The Company's My BJ's Perks Mastercard holders earn 3% or 5% cash back on all qualified purchases made at BJ's and 1% or 2% cash back on purchases made with the card outside of BJ's. Cash back is in the form of electronic awards issued in $20 increments that may be used online or in-club at the register and expire six months from the date issued. Earned rewards may be redeemed on future purchases made at the Company. The Company recognizes revenue for earned rewards when customers redeem such rewards as part of a purchase at one of the Company's clubs or the Company's website. The Company accounts for these transactions as multiple element arrangements and allocates the transaction price to separate performance obligations using their relative fair values. The Company includes the fair value of reward dollars earned in deferred revenue at the time the reward dollars are earned. Membership-The Company charges a membership fee to its customers. That fee allows customers to shop in the Company's clubs, shop on the Company's website, and purchase gas at the Company's gas stations for the duration of the membership, which is 12 months. Because the Company has the obligation to provide access to its clubs, website, and gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership. The following data were extracted from income statement, balance sheet, and footnotes of BJ's 10-Q report for the second quarter of 2018: ($ millions) Net sales Membership fee income Total revenues Twenty-six weeks ended August 4, 2018 $5,607.4 124.6 $5,732.0 Deferred revenue - membership fees August 4, 2018 January 28, 2018 $116.9 $113.6 Deferred revenue - membership fees Prepare journal entries to record (1) membership fees collected in cash in the first half of fiscal year 2018 and (2) membership fee revenue recognized over that period. Note: Enter answers in millions. Ref. Description Debit Credit (1) Cash = Deferred membership fees 156.3 X 0 0 156.3 X (2) Deferred membership fees 152.2 X Membership fee revenue 0 0 152.2 x Question 4 Partially correct Mark 1.33 out of 2.00 Flag question Accounting for Membership Fees and Rewards Program BJ's Wholesale Club Holdings, Inc. provides the following description of its revenue recognition policies for membership fees and its reward program. Performance Obligations The Company identifies each distinct performance obligation to transfer goods (or bundle of goods) or services. The Company recognizes revenue when (or as) it satisfies a performance obligation by transferring control of the goods or services to the customer. Merchandise sales-The Company recognizes sale of merchandise at clubs and gas stations at the point of sale when the customer takes possession of the goods and tenders payment. BJ's Perks Rewards-The Company has a customer loyalty program called the BJ's Perks Rewards Program for which the Company offers points based on dollars spent by the customer. The Company also has a co-branded credit card program which provides members additional reward dollars for certain purchases. The Company's BJ's Perks Rewards members earn 2% cash back, up to a maximum of $500 per year, on all qualified purchases made at BJ's. The Company's My BJ's Perks Mastercard holders earn 3% or 5% cash back on all qualified purchases made at BJ's and 1% or 2% cash back on purchases made with the card outside of BJ's. Cash back is in the form of electronic awards issued in $20 increments that may be used online or in-club at the register and expire six months from the date issued. Earned rewards may be redeemed on future purchases made at the Company. The Company recognizes revenue for earned rewards when customers redeem such rewards as part of a purchase at one of the Company's clubs or the Company's website. The Company accounts for these transactions as multiple element arrangements and allocates the transaction price to separate performance obligations using their relative fair values. The Company includes the fair value of reward dollars earned in deferred revenue at the time the reward dollars are earned. Membership-The Company charges a membership fee to its customers. That fee allows customers to shop in the Company's clubs, shop on the Company's website, and purchase gas at the Company's gas stations for the duration of the membership, which is 12 months. Because the Company has the obligation to provide access to its clubs, website, and gas stations for the duration of the membership term, the Company recognizes membership fees on a straight-line basis over the life of the membership. The following data were extracted from income statement, balance sheet, and footnotes of BJ's 10-Q report for the second quarter of 2018: ($ millions) Net sales Membership fee income Total revenues Twenty-six weeks ended August 4, 2018 $5,607.4 124.6 $5,732.0 Deferred revenue - membership fees August 4, 2018 January 28, 2018 $116.9 $113.6 Deferred revenue - membership fees Prepare journal entries to record (1) membership fees collected in cash in the first half of fiscal year 2018 and (2) membership fee revenue recognized over that period. Note: Enter answers in millions. Ref. Description Debit Credit (1) Cash = Deferred membership fees 156.3 X 0 0 156.3 X (2) Deferred membership fees 152.2 X Membership fee revenue 0 0 152.2 x
Expert Answer:
Answer rating: 100% (QA)
Based on the provided information we are asked to prepare journal entries for the following two events 1 Membership fees collected in cash in the firs... View the full answer
Related Book For
Financial Accounting
ISBN: 9781618533111
6th Edition
Authors: Michelle L. Hanlon, Robert P. Magee, Glenn M. Pfeiffer, Thomas R. Dyckman
Posted Date:
Students also viewed these accounting questions
-
BJ's Wholesale Club Holdings, Inc. provides the following description of its revenue recognition policies for membership fees and its reward program. Performance Obligations: The Company identifies...
-
BJ's Wholesale Club Holdings, Inc. provides the following description of its revenue recognition policies for membership fees and its reward program. Performance Obligations The Company identifies...
-
X = {a,b,c,d. e, f} olmak zere (X.) ksmi sral kmesinin grafii aada verilmitir. (a) (X.) ksmi sral kmesinin maksimal, minimal, minimum ve maksimum elemanlarn belirtiniz. (b) (X.) kismi sral kmesinin Y...
-
A lateral beam guidance system has an inner loop as shown in Figure CP10.7, where the transfer function for the coordinated aircraft is [26] Consider the PI controller (a) Design a control system to...
-
what scenarios is thread-local storage beneficial, and how does it compare to other state-sharing techniques in terms of efficiency and maintainability ?
-
The Scottie Sweater Company produces sweaters under the Scottie label. The company buys raw wool and processes it into wool yarn from which the sweaters are woven. One spindle of wool yam is required...
-
A 10.0 g bullet moves at a constant speed of 500.0 m/s and collides with a 1.50 kg wooden block initially at rest. The surface of the table is frictionless and 70.0 cm above the floor level. After...
-
Jeff Bezos, after stepping down from Amazon, forms a new corporation by contributing land with a basis of $150,000 and a fair market value of $2,000,000. The land has an outstanding mortgage loan of...
-
please re word this statement " Collaborated with other administrators and support personnel, management, and clients on a regular basis Answered and directed phone calls from vendors, coworkers, etc...
-
Discuss the following types of financial transactions that commonly take place in tourism, travel, hospitality and event organisations in 50-100 words each: Advance payments Application of Goods...
-
1.what is a budget. How does a budget contribute to good Management. (2). Jane Gilligan ask your help in understanding the essential of effective budgeting. Identify the essential of Jane. (3). Lori...
-
There is an old adage that leverage is a "double edged sword." Try to find two public companies that used leverage, one successfully and one unsuccessfully. Attempt to explain why each company took...
-
How can forward hedging can reduce risk, it can also limit potential profits? Could you also provide reference to refer too?
-
Define the following types of data: 1. Cross-sectional, 2. Time series,
-
How has the globalization of firms affected the diversity of their employees? Why has increased diversity put an additional burden on accounting systems?
-
How long did it take Mendel to complete the experiment in Figure 2.5? Figure 2.5 Experimental level P plants Tall Dwarf Note: The P cross produces seeds that are part of the Fi generation. Tall Self-...
-
Using Mendels data from the experiment in Figure 2.8, conduct a chi square test to determine if the data agree with Mendels law of independent assortment. Mendels data: THE DATA P cross F1 generation...
-
On rare occasions, an organism may have three copies of a chromosome and therefore three copies of the genes on that chromosome (instead of the usual number of two copies). The alleles for each gene...
Study smarter with the SolutionInn App