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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 2018 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 60% probability that any point issued will be redeemed for the discount. During July 2018, the company
records $135,000 of revenue and awards 125,000 loyalty points. The aggregate stand-alone selling price of the
purchased products is $135,000. Eighty percent of sales were cash sales, and the remainder were credit sales.
Required:
1. Prepare Supply Club’s
2. During August, customers redeem loyalty points on $60,000 of merchandise. Seventy-five percent of those
sales were for cash, and the remainder were credit sales. Prepare Supply Club’s journal entry to record those
sales.
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- Joe Restaurant Ltd operates fine dine restaurant in downtown Toronto. It has a policy that customers need to make a deposit of $50 when they make the reservation. Deposit will apply against their bill. Tom made a reservation on Jan 01, 2021, for Feb 14, 2021 and made a deposit of $50 from his credit card. He dine in on Feb 14, 2021 and received a bill of $200, he paid $150 since he already had a credit of $50 from his deposit on Jan 01, 2021. Based on the revenue recognition accounting principal, when would Joe record the revenue of $200? A Joe Restaurant will record $50 revenue on Jan 01 and $150 revenue on Feb 14. Joe Restaurant will record the entire revenue of $200 on on Feb 14. c Joe Restaurant will record the entire revenue of $200 on Jan 01arrow_forwardLamplight Plus sells lamps to consumers. The company contracts with a supplier who provides them with lamp fixtures. There is an agreement that Lamplight Plus is not required to provide cash payment immediately and instead will provide payment within thirty days of the invoice date. Additional information: • Lamplight purchases 25 light fixtures for $30 each on August 1, invoice date August 1, with no discount terms. Lamplight returns 15 light fixtures (receiving a credit amount for the total purchase price per fixture of $30 each) on August 3. • Lamplight purchases an additional 15 light fixtures for $10 each on August 19, invoice date August 19, with no discount terms. • Lamplight pays $110 toward its account on August 22. What amount does Lamplight Plus still owe to the supplier on August 30? What account is used to recognize this outstanding amount?arrow_forwardGamestop Corp. said the following about its gift card sales in its most recent (2019) annual report:“We establish a liability upon the issuance of merchandise credits and the sale of gift cards. Revenue is subsequently recognized when the credits and gift cards are redeemed.”When Gamestop sells a gift card to a customer, what is the impact on Gamestop’s financial statements? Cash increases and the Income Statement increases Cash increases and Inventory decreases Cash increases and Liabilities increase Cash decreases and the Income Statement decreases No effect because the customer has not yet used the gift cardarrow_forward
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- Please show all the work.arrow_forwardJounalize all entries required for First Place Running Shoes. ( Record debits first, then credits. Select the Explanation on the last line of the journal entry table.) May 3, 2018: Recorded credit sales of 100,000. Ignore Cost of Goods Sold. Oct 1, 2018: Loaned $18,000 to Tess Philip, an executive with the company, on a one-year 7% note. Dec 31, 2018: Accrued interest revenue on the Phillip note. Oct 1, 2019: Collected the maturity value of the Phillip note. (Prepare a single compound journal entry.)arrow_forwardLamplight Plus sells lamps to consumers. The company contracts with a supplier who provides them with lamp fixtures. There is an agreement that Lamplight Plus is not required to provide cash payment immediately and instead will provide payment within thirty days of the invoice date. Additional information: • Lamplight purchases 25 light fixtures for $25 each on August 1, invoice date August 1, with no discount terms. Lamplight returns 5 light fixtures (receiving a credit amount for the total purchase price per fixture of $25 each) on August 3. • Lamplight purchases an additional 15 light fixtures for $10 each on August 19, invoice date August 19, with no discount terms. • Lamplight pays $130 toward its account on August 22. What amount does Lamplight Plus still owe to the supplier on August 30? What account is used to recognize this outstanding amount?arrow_forward
- Max Corp. sold goods for $36,000 on July 17, 2020, and accepted a 12%, 90-day note. On August 1, the note was sold to a bank at a 15% discount rate. Required: a. Compute the proceeds. Assume a 360-day year. b. If the maker dishonored the note at maturity, prepare the entry for Max Corp. assuming $75 of bank protest fees. If an amount box does not require an entry, leave it blank.arrow_forwardOn July 10, 2020, Tamarisk Music sold CDs to retailers on account and recorded sales revenue of $657,000 (cost $538,740). Tamarisk grants the right to return CDs that do not sell in 3 months following delivery. Past experience indicates that the normal return rate is 15%. By October 11, 2020, retailers returned CDs to Tamarisk and were granted credit of $84,200.Prepare Tamarisk’s journal entries to record (a) the sale on July 10, 2020, and (b) $84,200 of returns on October 11, 2020, and on October 31, 2020. Assume that Tamarisk prepares financial statement on October 31, 2020. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) No. Date Account Titles and Explanation Debit Credit (a) enter an account title to record sales on July 10, 2017 enter a debit amount…arrow_forwardIf NetSolutions sells a customer some products on account (accounts receivable) and offers a discount for early payment of the customers accounts receivable within the credit period, the discount is called a _________________________________. Group of answer choices trade discount purchases discount sales discount sales allowancearrow_forward
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