1. How should the $25 Referral Credit be recorded in Runway’s income statement? 2. When would Runway record the $25 Referral Credit? What are the journal entries Runway would record when the $25 Referral Credit is earned by the Existing Customer? What are the journal entries Runway would record when the $25 Referral Credit is redeemed against a $100 purchase made by the Existing Customer? 3. Runway is planning to adopt IFRSs in the near future. What is the relevant accounting guidance it would follow under IFRSs?
Q: 2. A company sold a machine that originally cost $250,000 (Basis) for $120,000 (Proceeds) when…
A: Answer 2) Journal entry is the procedure for initially documenting commercial transactions in the…
Q: Using the following data, estimate the new Return on Investment if there is a 11% decrease in…
A: ROI taking average operating assets as the base is calculated by taking net profit and dividing it…
Q: Instruction: (Horizontal Analysis) Present an interpretation and conclusions about the result of…
A: There are various methods used for analysis of financial statements. Commonly used methods are *…
Q: Name J. Smith1 J. Smith2 J. Smith3 J. Smith4 J. Smith5 J. Smith6 J. Smith7 J. Smith8 J. Smith9 J.…
A: Vlookup function in excel is one of the most useful function. It needs to be used whenever a value…
Q: Barrel Enterprises has two divisions, East Division and West Division. In Year 1, the West Division…
A: Profit Margin :— It is calculated by dividing net operating income by net sales. Return on…
Q: s from today of the investment
A: Investment - A purchase made with the intention of creating income or capital growth is known as an…
Q: :00 QS 20-22 (Algo) Computing budgeted accounts receivable LO P2 Kingston budgets total sales for…
A: Budgeting - Budgeting is the process of estimating future operations based on past performance. %…
Q: The following additional information is available December 31, 2021: 1) Store Supplies on hand on…
A: Explanation - There are statements of the organization which show different accounting financials.…
Q: Hillside issues $1,400,000 of 5%, 15-year bonds dated January 1, 2021, that pay interest…
A: Bond is a financial security which is issued by large organization in order to raise funds. Bonds…
Q: As a CPA or an accounting professional, how would you handle the issue of inaccurate earnings on…
A: As we know, a certified public accountant (CPA) or professional accounting assists businesses,…
Q: Vandenberg, Inc., produces and sells two products: a ceiling fan and a table fan. Vandenberg plans…
A: Break even point (Units)= Fixed cost / Contribution margin per unit Break even point ($)= Fixed…
Q: What was the total amount deducted from Lily’s pay for Federal, State, and Local income tax?…
A: Total taxes to be paid depends on wages and there are different types of taxes to be paid local…
Q: Buggy Company purchased equipment on January 1, 2020, for $200,000. The residual value is $20,000…
A: Double declining balance depreciation involves depreciating the asset at a double rate on a…
Q: You make component X in-house at a cost of $16 per unit, which consists of $2 direct labor per unit,…
A: The change in profit is defined as the amount that will arise due to a change in the decision of…
Q: Ending inventory for the year ended December 31, 2017, is understated by $15,000. How will this…
A: If the ending inventory of one year is overstated then the net income will be overstated of the…
Q: You earned $50,140 taxable income last year. What is your effective tax rate using the Single Filer…
A: Case 1 - If taxable Income is earned in Year 2022 - $50,140. Rates for tax year 2021 will be…
Q: With respect to derivative instruments that are designated as hedges, the FASB calls for which of…
A: The question is related to disclosure requirements of derivative instruments that are designed as…
Q: What would be the tax liability for a single taxpayer who has a gross income of $55,300 (use the…
A: It is the amount that every person who comes under different tax brackets must pay and that amount…
Q: Flaherty is considering an investment that, if paid for immediately, is expected to return $149,000…
A: Time value of money :— According to this concept, value of money in present day is greater than the…
Q: Direct Labor Variances
A: Labor variance signifies the difference between the actual performance and actual performance of…
Q: Chona company failed to recognize accruals and prepayments since the inception of its business three…
A: Income statement shows the company's revenues , expenses and profitability over a period of time. It…
Q: What amount you need to deposit now into an account earning 4.5% every four months if you need to…
A: It has been provided: Time period = 8 years Future value = $45,000 Interest rate = 4.5%…
Q: following are selected operating data for Jackson Company's Blending Department for April 2019.…
A: Equivalent units of production are based on whole units and their percentage of completion. Cost…
Q: The prudence concept is applied here in the sense that revenue should not be anticipated, and…
A: Accrual Basis of Accounting: Accrual Basis of accounting refers to the accounting, where the…
Q: On January 2, 2018, Keystone Company borrowed $60,000 from Bank Three. The loan was to be repaid in…
A: Solution: Total borrowings = $60,000 Annual payments = $10,000 Balance borrowings at Dec, 31, 2019 =…
Q: Wyatt Company acquired 30% interest in the voting stock of Staples Inc. for $650,000. During the…
A: ANSWER:- $ 54,000 is correct answer $54,000 amount will wyatt company report on its income statement…
Q: Cash is an important asset for a business which should be protected against fraud or theft. Which…
A: There are a number of internal controls which can be put in place by a company to protect its cash.…
Q: Rockport Industries Inc. gathered the following data for March: Sales price per unit Number of units…
A: The gap between the predicted sales and the actual sales may be measured using something called a…
Q: Agee Technology, Inc., issued 9% bonds, dated January 1, with a face amount of $1,200 million on…
A: Interest expense from January = issue price of bond × yield rate×6months/12months =…
Q: Calculating Break-Even In each of the following cases, find the unknown variable. Ignore taxes.…
A: Break Even (BEP) :— It is the point at which total cost is equal to total revenue. At this point,…
Q: nformation below provides details on the Income Statements for t for Palace Enterprise Limited and…
A: The income statement refers to the financial document that reflects the profits gained by a company…
Q: Oriole Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an…
A: Lower of cost or market: - this method is used to value the assets. The assets is valued at…
Q: TRUE OR FALSE 1. A contingent asset is only be disclosed when it is probable and possible. 2. A…
A: The 3 basic financial statements are enumerated as below : 1.Profit and Loss Account 2. Balance…
Q: Digital Enterprises is a merchandising company. All inventory sales and purchases are made on…
A: Total Credit sales = Accounts receivable balance at end + Cash collections - Opening accounts…
Q: The crash testing department of Hyundai tests new vehicle models for safety before they go into mass…
A: Cost drivers are the direct cause of a business expense. A cost driver is any activity that triggers…
Q: for yourself: Gross Salary: $160,000 Interest Earned: $2,000 IRA Contribution: $5,000 Standard…
A: There are many sources of income and gross income is total income available from all sources and…
Q: Kelton Inc. purchases inventory for $2,000 and incurs shipping costs of $100. To record this…
A: The expenses incurred for purchasing inventory are part of the inventory and they should be debited…
Q: Which statement is true regarding divisional performance? O If a division's return on investment is…
A: Due to the large size of the organization, there are many divisions. They all work for the single…
Q: [The following information applies to the questions displayed below.] At the beginning of the year,…
A: Depreciation shows the reduction in the value of fixed asset over its useful life. It reduces the…
Q: A recent annual report for Celtic Air Lines included the following note: NOTE 1: SUMMARY OF…
A: The frequent usage of the assets for business reasons reduces the value. Throughout the asset's…
Q: BEJ-3 Identify the journal in which each of the following transactions is recorded. (a) Cash sales.…
A: Journal is a part of books of accounts used to record business transactions.
Q: djusting entries for accrued salaries Instructions Chart of Accounts Journal Instructions Paradise…
A: Journal Entry :— It is an act of recording transaction in books of account when transaction…
Q: EJ-2 Presented below is the subsidiary Accounts Receivable account of Martha Nott. Date 2017 Sept. 2…
A: Subsidiary Accounts Receivable Account is the details of a particular customer's account balance…
Q: What is the present value of a corporate bond with a coupon rate of 6% that pays you K102.50 in the…
A: Time value of money :— According to this concept, value of money in present day is greater than the…
Q: On December 31, 2023, Li-Wu Company had 100,000 shares of common stock outstanding and 24,000 shares…
A: In order to determine the Basic earning per share, the earnings available to equity shareholders are…
Q: Which of the following is an “above-the-line” deduction? (A) State and local taxes (B) Mortgage…
A: Above-the-line deductions refer to the amount subtracted from the annual gross income as per IRS…
Q: On July 1, 2014, Sheridan Enterprises sold equipment with an original cost of $79,000 for $30,600.…
A: The question is based on the concept of Depreciation Accounting. Depreciation is the decrease in the…
Q: Coulter Company purchases a piece of equipment on February 1, 2020 for $80.000. In addition to the…
A: All the costs that are capitalized with the cost of the equipment will be added. Cost of property…
Q: A partnership has the following capital balances: Jeng: Capital P60,000 Pong: Capital P30,000 PJ…
A: The principal balance of a new mortgage at any given time, multiplied by the applicable interest…
Q: Briefly explain two disadvantages of sale and leaseback transactions
A: In a sale and leaseback, a business sells a structure that it both owns and occupies while also…
1. How should the $25 Referral Credit be recorded in Runway’s income
statement?
2. When would Runway record the $25 Referral Credit? What are the
entries
the Existing Customer? What are the journal entries Runway would record
when the $25 Referral Credit is redeemed against a $100 purchase made
by the Existing Customer?
3. Runway is planning to adopt IFRSs in the near future. What is the relevant
accounting guidance it would follow under IFRSs?
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
- Runway Discount (“Runway” or the “Company”) is a privately held online retailer that sells discounted high-end fashion. In an effort to increase its sales and customer base, Runway implemented a customer referral marketing campaign (the “Refer-a-Friend Program”) whereby existing customers can refer friends to Runway and receive a $25 credit towards the purchase of future merchandise. The terms of the program are as follows: Runway offers existing customers (the “Existing Customer”) a $25 credit (the “$25 Referral Credit”) if the Existing Customer refers a friend (the “New Customer”) to Runway’s Web site and the New Customer purchases merchandise from Runway. After a purchase is made by the New Customer, the Existing Customer receives a$25 credit to be applied to a future purchase from Runway. The $25 Referral Credit represents the fair value of the cost Runway would pay to acquire a new customer from an unrelated third party or marketing firm who is not a purchaser of its products.…A school purchasing manager is seeking to buy tablets from either Entity A or Entity B and will pay shipping costs. The purchase price is $500 each. Entity A purchases the tablets from the manufacturer, Banana Industries (for $400). Entity A has the tablets shipped to its distribution center in Denver, and then ships them to schools when a sale is made. Entity A at times offers discounts to schools in accordance with its marketing strategy. On the other hand, Entity B sells tablets from a variety of manufacturers including Banana Industries. When a sale is made, Entity B remits the proceeds to the manufacturer, and retains a 10% commission (here $50). Entity B has no discretion as to the sales price. The manufacturer then ship the equipment to the customer. For each arrangement, indicate how much revenue and gross profit should be recognized. Provide support for your answer from the ASC and cite the applicable provisions. You should cite like this: ASC 606-10-35-3(e) so we can find…Supply Club, Inc., sells a variety of paper products, office supplies, and other products used by businesses andindividual consumers. During July 2018 it started a loyalty program through which qualifying customers canaccumulate points and redeem those points for discounts on future purchases. Redemption of a loyalty pointreduces the price of one dollar of future purchases by 20% (equal to 20 cents). Customers do not earn additionalloyalty 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 companyrecords $135,000 of revenue and awards 125,000 loyalty points. The aggregate stand-alone selling price of thepurchased products is $135,000. Eighty percent of sales were cash sales, and the remainder were credit sales.Required:1. Prepare Supply Club’s journal entry to record July sales.2. During August, customers redeem loyalty points on…
- Supply Club, Incorporated, sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2024, 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 earn one loyalty point for each dollar of goods purchased, but do not earn additional loyalty points for purchases that are made by redeeming loyalty points. Based on past experience, Supply Club estimates a 60% probability that any point issued will be redeemed for the discount. During July 2024, the company redeemed 10,600 points and sold additional product of $132,500, so it recorded of revenue of $143,100. The aggregate stand-alone selling price of the purchased products is $143,100. Eighty percent of sales were cash sales, and the remainder were credit sales.…Supply Club, Incorporated, sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2024, 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 earn one loyalty point for each dollar of goods purchased, but do not earn additional loyalty points for purchases that are made by redeeming loyalty points. Based on past experience, Supply Club estimates a 60% probability that any point issued will be redeemed for the discount. During July 2024, the company redeemed 11,400 points and sold additional product of $142,500, so it recorded of revenue of $153,900. The aggregate stand-alone selling price of the purchased products is $153,900. Seventy percent of sales were cash sales, and the remainder were credit sales.…Supply Club, Incorporated, sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2024, 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 earn one loyalty point for each dollar of goods purchased, but do not earn additional loyalty points for purchases that are made by redeeming loyalty points. Based on past experience, Supply Club estimates a 60% probability that any point issued will be redeemed for the discount. During July 2024, the company redeemed 11,200 points and sold additional product of $140,000, so it recorded of revenue of $151,200. The aggregate stand-alone selling price of the purchased products is $151,200. Eighty percent of sales were cash sales, and the remainder were credit sales.…
- Supply Club, Incorporated, sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2024, 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 earn one loyalty point for each dollar of goods purchased, but do not earn additional loyalty points for purchases that are made by redeeming loyalty points. Based on past experience, Supply Club estimates a 60% probability that any point issued will be redeemed for the discount. During July 2024, the company redeemed 10,200 points and sold additional product of $127,500, so it recorded of revenue of $137,700. The aggregate stand-alone selling price of the purchased products is $137,700. Seventy percent of sales were cash sales, and the remainder were credit sales.…Maximum Inc. (retailer) has a loyalty program that rewards its customers one point per $1 spent. Points are redeemable for $0.20 off future purchases. A customer purchases products (cost of $280) for cash at the usual selling price of $400 and earns 400 points redeemable for $80 off future purchases of goods or services. The retailer expects redemption of 360 points or 90% of points earned. a.) How should the transaction price be allocated among the performance obligation(s)?Note: Round each allocated transaction price in the table below to the nearest dollar. b. Prepare Maximum’s journal entry to record the $400 sale to the customer where the customer earned 400 loyalty points.The following are three independent situations. 1. Sandhill Rewards Inc. provides rewards services to licensees. Sandhill records service revenue related to rewards (granted as reward vouchers, which can be redeemed at a variety of retailers) and recognizes the cost of redemptions in the year vouchers are sold to licensees. Sandhill's past experience indicates that only 80% of the vouchers sold to licensees will be redeemed. Sandhill's liability for stamp redemptions was $12,693,900 at December 31, 2024. Additional information for 2025 is as follows. Service revenue from vouchers sold to licensees Cost of redemptions (vouchers sold prior to 1/1/25) $8,614,200 If all the vouchers sold in 2025 were presented for redemption in 2026, the redemption cost would be $5,173,300. What amount should Sandhill report as a liability for voucher redemptions at December 31, 2025? Liability for stamp redemptions at December 31, 2025 $ Consumer expiration date Total face amount of coupons issued Total…
- Arcontica Classic Furniture (ACF) manufactures a range of rustic chairs, lawn furniture, and interior furnishing including lamps, desks, and bed frames. ACF's customer base comprises both private customers and retail outlets. Consumer's sales are for cash or by credit card, but business customers are for cash or by credit card, but business customers are extended a line of credit. New business customers undergo a credit check before receiving a credit line. All sales are made online, by fax or mailed in hard copy order. When a credit order is received, the sales clerk verifies inventory availability, prepares a sales order, and sends the stock release copy to the warehouse clerk who picks the goods and arranges shipment. He then prepares the bills of lading and sends copies of the shipping notices to the billing department and inventory control. The billing department updates the sales journal and sends an invoice to the customer. The clerk then sends the shipping notice to the AR…Supply Club, Incorporated, sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2024, 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 2021, the company redeemed 10,200 points and sold additional product of $127,500, so it recorded $137,700 of revenue. The aggregate stand-alone selling price of the purchased products is $137,700. 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…Supply Club, Incorporated, sells a variety of paper products, office supplies, and other products used by businesses and individual consumers. During July 2024, 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 2024, the company recorded revenue of $135,400 and awarded 10,400 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. & 2. Prepare Supply Club's journal entry to record July and August sales. During August, customers redeem…