SOCK SHOP Inc. began operating on September 1, 2022. SOCK SHOP follows IFRS and prepares adjusting entries monthly. SOCK HOP offers a loyalty program under which for every 12 pairs of hosiery a customer purchases they are eligible to receives one pair free. Based on industry data, 80% of customers are expected to redeem the free pair. All socks sell for $12 per pair. In January 2022, 960 pairs of socks were sold for cash and 40 free pairs were redeemed. Cost of product provided to customers was $4,000. Required: a) Calculate SOCK SHOP's gross profit in September 2022 b) Calculate SOCK HOP's redemption liability under the loyalty plan at its September 30, 2022 month end.
SOCK SHOP Inc. began operating on September 1, 2022. SOCK SHOP follows IFRS and prepares adjusting entries monthly. SOCK HOP offers a loyalty program under which for every 12 pairs of hosiery a customer purchases they are eligible to receives one pair free. Based on industry data, 80% of customers are expected to redeem the free pair. All socks sell for $12 per pair. In January 2022, 960 pairs of socks were sold for cash and 40 free pairs were redeemed. Cost of product provided to customers was $4,000. Required: a) Calculate SOCK SHOP's gross profit in September 2022 b) Calculate SOCK HOP's redemption liability under the loyalty plan at its September 30, 2022 month end.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Qw.11.
Transcribed Image Text:SOCK SHOP Inc. began operating on September 1, 2022. SOCK SHOP follows IFRS
and prepares adjusting entries monthly.
SOCK HOP offers a loyalty program under which for every 12 pairs of hosiery a
customer purchases they are eligible to receives one pair free. Based on industry
data, 80% of customers are expected to redeem the free pair. All socks sell for $12
per pair.
In January 2022, 960 pairs of socks were sold for cash and 40 free pairs were
redeemed. Cost of product provided to customers was $4,000.
Required:
a) Calculate SOCK SHOP's gross profit in September 2022
b) Calculate SOCK HOP's redemption liability under the loyalty plan at its
September 30, 2022 month end.
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