Shediac Bay Marina had a customer loyalty program at its gas dock. For every litre of gasoline purchased, the customer would get a redemption award of $.015 which can be used to purchase products in the company's retail marine store. In July, the company sold 100,500 litres of gasoline.
-The entry to record the liability for the July sales would a $______ credit to ________.
A) $1,507.50; Redemption Reward Liability
B) $1,507.50; Sales Discounts
C) $1507.50; Cash
D) $3,015; Cash

Question

Quizplus · Accepted Answer

The correct entry involves recognizing a liability for the redemption rewards earned by customers, which is calculated as 100,500 litres * $0.015 = $1,507.50. This amount is credited to a liability account, typically named something like "Redemption Reward Liability," indicating the company's obligation to provide rewards in the future.

Shediac Bay Marina Had a Customer Loyalty Program at Its