I have some doubts.
Assume one of my client is running a super market and he have the scheme like reward points. i.e whatever the customer's bill value, he is giving some reward points. and the accumulated points prints in bill. (Ex. for 100Rs. 1 point). If the customer's reward points exceeds certain limit, then the customer can redeem the reward points as cash . i.e. in the sales bill the reward amount will be reduced.
Here my doubts are : How we can post the entry for that sales made with reward points.
(I guess Sales A/c Cr ; Reward expenses A/c Dr ; Cash A/C Dr (balance cash)).
My biggest doubt is : Can we make a provision for such kind of expenses. Like the total's customer reward point came to 1 lac. Anyhow the customer will redeem their reward points in future. In this case, for our accounting purpose can we write the expenses entry and make a provision ledger. And later when the customer redeems that, we can pass JV againts this provisional ledger. Is it Ok as per the accounting norm. i.e can we write an expenses and make a provision for the expenses which will happen in future?
Please post your valuable comments and help me in this.
Thanks in advance
CAclubindia
