Starting on January 1, 2023, LEMUR Company, an operator of grocery
chain, introduced a customer loyalty program where for every P100
purchase, the Company will grant a point with five-year validity. Each ponit
will reduce the amount to be paid for future purchases by P1.00. During the
year, the Company generated sales revenue of P100,000,000, resulting to
the distribution of 1,000,000 total points. The Company expects that only
75% of these points will be used in the future before they lapse after five
years.
The customers have used the following number of points per year:
Year No. of Points Used
2023 180,000
2024 240,000
2025 120,000
Starting January 1, 2025, the Company now estimates that a total of 80%
of the points will be ultimately redeemed.
Required:
a. Income from points to be recognized from 2023 to 2025.
b. Remaining balance of the contract liability - points as of December 31,
2023, 2024, and 2025.
of grocery Stand-alone selling
ery P100 price of initially sold
idity. Each ponit a. goods ₱ 100,000,000
P1.00. During the
00, resulting to Discount amount
pects that only provided per point ₱ 1.00
apse after five
Multiply by: Portion
expected to be used by
customers 75%
er year:
Stand-alone selling
price of a point ₱ 0.75
Multiply by: No. of
points distributed 1,000,000
Estimated stand-alone
selling price of points ₱ 750,000.00
a total of 80%
Allocation to sold
goods ₱ 100,000,000
Multiply by: (100M/100.750M)
December 31, Total ₱ 99,255,583
Allocation to points ₱ 100,000,000
Multiply by: (750k/100.750M)
Total ₱ 744,417
Contract liability -
2023 points ₱ 178,660
Income from
points ₱ 178,660
To recognize
income from points
(180,000/750,000)x744
,417
2024 Cumulative income ₱ 416,874
((180K+240K)/
750k)x744,417
Less: Income from
points 2023 178,660
Income from points,
2024 ₱ 238,214
2025 Cumulative income ₱ 502,481
((180K+240K+120k)/
800k)x744,417
Less: Income from
points 2023 & 2024 416,874
Income from points,
2025 ₱ 85,607
Contract liability -
b. points ₱ 744,417
Less: 178,660
End bal., 2023 ₱ 565,757
Contract liability -
points ₱ 565,757
Less: 238,214
End bal., 2024 ₱ 327,543
Contract liability -
points ₱ 327,543
Less: 85,607
End bal., 2025 ₱ 241,936
6. During the year 2023, TARSIER Company, a gasoline station
operator, introduced a customer loyalty program where a loyalty
point is graned for every P200 of petroleum purchases of its
customers. Each loyalty point will reduce the customers' future
purchases by P4.00. For the year 2023, the Company reported a total
revenue of P400,000,000. The Company expects that 20% of these
points will not be exercised.
The customers have used the following number of points per yer:
Year No. of Points Used
2023 200,000
2024 250,000
2025 160,000
2026 220,000
Starting on January 1, 2026, the Company changed its estimate to
25% of the points are expected that will never be exercised.
Required:
a. Income from points to be recognized from 2023 to 2026
b. Remaining balance of the contract liability - points as of December
31, 2023, 2024, 2025, and 2026.
tion Stand-alone selling price of
oyalty a. initially sold goods ₱400,000,000
s
ture Discount amount provided
ted a total per point ₱ 4.00
of these
Multiply by: Portion
expected to be used by
er yer: customers 80%
Stand-alone selling price of
a point ₱ 3.20
Multiply by: No. of points
distributed 2,000,000
Estimated stand-alone
selling price of points ₱ 6,400,000
mate to
d. Allocation to sold goods ₱ 400,000,000
Multiply by: (400M/406.4M)
Total ₱ 393,700,787
December Allocation to points ₱ 400,000,000.00
Multiply by: (6.4M/406.4M)
Total ₱ 6,299,213.00
2023, No. of points 200,000
Divide by: 1,600,000
0.125
Multiply by: 6,299,213
Total income from points,
2023 ₱ 787,402
Cumulative income to be
recognized from 2023 to
2024 ((200K+250K)/1.6M) x
6,299,213 ₱ 1,771,654
Less: Income from 2023
Income from points, 2024 ₱ 984,252
Cumulative income to be
recognized from 2023 to
2025
((200K+250K+160K)/1.6M)
x 6,299,213 ₱ 2,401,575
Less: Income from 2023
and 2024 442,913
Income from points, 2025 ₱ 629,921
Cumulative income to be
recognized from 2023 to
2026
((200K+250K+160K+220K)/
1.5M) x 6,299,213 ₱ 3,485,565
Less: Income from 2023
and 2025
Income from points, 2026 ₱ 1,083,990
b. Contract liability - Points ₱ 6,299,213
Less: 196,850
End bal., 2023 ₱ 5,511,811
Contract liability - Points ₱ 5,511,811
Less: 246,063
End bal., 2024 ₱ 4,527,559
Contract liability - Points ₱ 4,527,559
Less: 157,481
End bal., 2025 ₱ 3,897,638
Contract liability - Points ₱ 3,897,638
Less: 270,997
End bal., 2026 ₱ 2,813,648
7. From January 1, 2023 to April 30, 2023, GORILLA Company has
sold a total of 40,000 t-shirts at P250 unit selling price. Also, during
the same period, the Company granted a promotional program
wherein for every purchase of four units of t-shirts, the Company
will grant a coupon for a free shirt ("buy four, get one free"). A
total of 10,000 of such coupons were distributed. However, these
coupons may be exercised only from July 1, 2023 to June 30, 2024.
The Company expects that only 70% of these coupons will be
redeemed before they lapse on June 30, 2024. For the years 2023
and 2024, the customers used 4,500 coupons and 2,000 coupons,
respectively.
Required:
a. Journal entries from 2023 to 2024.
b. Remaining balance of the contract liability - coupons as of
December 31, 2023 and 2024.
ny has Discount amount provided
o, during a. per point ₱ 250.00
ram Multiply by: Portion
mpany expected to be used by
). A customers 70%
these
Stand-alone selling price of a
0, 2024. point ₱ 175.00
be Multiply by: No. of points
s 2023 distributed 10,000
upons, Estimated stand-alone selling
price of coupons ₱ 1,750,000
Allocation to sold goods ₱ 10,000,000
Multiply by: (10M/11,750,000)
of
Total ₱ 8,510,638
Allocation to coupons ₱ 10,000,000
Multiply by: (1,750,000/11,750,000)
Total ₱ 1,489,362
2023 Cash ₱ 10,000,000
Sales revenue ₱ 8,510,638
Contract liability - coupons 1,489,362
To record sale
2023 Contract liability - coupons 957,447
Income from coupons 957,447
To recognize sales
revenue
(4.5k/7k) x 1,489,362
Cumulative income from
2023 and 2024 ((4.5K+2K) x
419,162) ₱ 1,382,979
Less: Income in 2023 269,461
Income from points, 2024 ₱ 425,532
2024 Contract liability - coupons 425,532
Income from coupons 425,532
To recognize sales
revenue
b. Contract liability - coupons ₱ 1,489,362
Less: 269,461
End bal., 2023 ₱ 531,915
Contract liability - coupons ₱ 531,915
Less: 119,761
End bal., 2024 ₱ 106,383
0
8. During the year 2023, BABON Company, an entity involved in
unlimited samgyupsal business, introduced a marketing program
wherein a card will be given to customers. For every person who
ate in the Company's restaurant, the Company will put a stamp on
the card. After accumulating 5 stamps on the card, the customer's
next visit will be free. The Company normally charges P500 per
person.
All in all, during the year 2023, the Company reported a total
samgyupsal revenue of P10,000,000 and distributed a total of
20,000 stamps. The Company expects that only 80% of these
stamps will be used to avail the free unlimited pass. During 2023,
12,000 of these stamps were used to avail the freebie.
Required:
a. Journal entries for the year 2023.
b. Remaining balance of the contract liability - stamps as of
December 31, 2023.
ved in Discount amount provided
ogram a. per stamp (P500/5) ₱ 100.00
n who Multiply by: Portion
amp on expected to be used by
tomer's customers 80%
0 per
Stand-alone selling price of
a point ₱ 80.00
tal Multiply by: No. of points
distributed 20,000
l of
ese Estimated stand-alone
g 2023, selling price of stamps ₱ 1,600,000
Allocation to sold goods ₱ 10,000,000
Multiply by: (10M/11.6M)
Total ₱ 8,620,690
f
Allocation to stamps ₱ 10,000,000
Multiply by: (1.6M/11.6M)
Total ₱ 1,379,310
2023 Cash ₱ 10,000,000
Sales revenue ₱ 8,620,690
Contract liability -
stamps 1,379,310
To record sale
2023 Contract liability - stamps 1,034,483
Income from premium 1,034,483
To recognize sales
revenue
(12K/16,000)x1,379,310
b. Contract liability - stamps ₱ 1,379,310
Less: 1,034,483
End bal., 2023 ₱ 344,827
9. During the month of January 2023, SAKI Company granted a
rebate coupon worth P187.50 for every customer's P1,000 single
receipt purchase. These rebate coupons are exercisable starting on
February 1, 2023 and have validity until January 31, 2025.
For the month of January 2023, the Company has reported total
revenue of P22,000,000 and granted 20,000 rebate coupons to the
customers. However, the Company expects that only 80% of these
coupons will be exercised before their expiration dates. During
2023 and 2024, the customers have used 8,000 coupons and
4,500 coupons, respectively.
Required:
a. Journal entries for the years 2023 and 2024.
b. Remaining balance of the contract liability - rebates as of
December 31, 2023 and 2024.
ed a Discount amount provided
single a. per rebate coupon ₱ 187.50
arting on Multiply by: Portion
expected to be used by
customers 80%
total
Stand-alone selling price of
ns to the a point ₱ 150.00
of these
ring Multiply by: No. of points
distributed 20,000
nd
Estimated stand-alone
selling price of rebates ₱ 3,000,000
Allocation to sold goods ₱ 22,000,000
f Multiply by: (22M/25M)
Total ₱ 19,360,000
Allocation to rebates ₱ 22,000,000
Multiply by: (3M/25M)
Total ₱ 2,640,000
2023 Cash ₱ 22,000,000
Sales revenue ₱ 19,360,000
Contract liability -
rebate 2,640,000
To record sale
2023 Contract liability - rebate 1,320,000
Income 1,320,000
To record revenue
from rebates
(8k/16k)x2,640,000
2024 Contract liabillity - rebate 742,500
Income 742,500
To recognize
revenue from rebate
coupons
(4.5k/16k)x2,640,000
b. Contract liability - Rebate ₱ 2,640,000
Less: 1,320,000
End bal., 2023 ₱ 1,320,000
Contract liability - Rebate ₱ 1,320,000
Less: 742,500
End bal., 2024 ₱ 577,500
10. For the year 2023, VERVET Company introduced a marketing
program where for P1,500 single or multiple receipt purchase, the
Company will grant a coupon containing rebate of P312.50 for
future purchases. These coupons have validity period of one year.
The Company expects that only 60% of these coupons will be used
before the expiration date.
During the year, the Company generated a total revenue of
P27,000,000 and granted 16,000 rebate coupons to the customers.
Actual coupons exercised during the year numbered 5,400
coupons.
Required:
a. Journal entries for the year 2023.
b. Remaining balance of the contract liability - rebates as of
December 31, 2023.
keting Discount amount
se, the provided per rebate
for a. coupon ₱ 312.50
e year. Multiply by: Portion
be used expected to be used by
customers 60%
Stand-alone selling price
f of a point ₱ 187.50
stomers.
Multiply by: No. of points
distributed 16,000
Estimated stand-alone
selling price of rebates ₱ 3,000,000
f Allocation to sold goods ₱ 27,000,000
Multiply by: (27M/30M)
Total ₱ 24,300,000
Allocation to rebate ₱ 27,000,000
Multiply by: (3M/30M)
Total ₱ 2,700,000
2023 Cash ₱ 27,000,000
Sales revenue ₱ 24,300,000
Contract liability -
rebate 2,700,000
To record sale
2023 Contract liability - rebate 1,518,750
Income 1,518,750
To record sales
revenue from rebate
b. Contract liability - rebate ₱ 2,700,000
Less: 1,518,750
End bal., 2023 ₱ 1,181,250
