Runway Company Essay Example | Topics and Well Written Essays - 750 words

cartroad Company - prove ExampleThe twenty five dollar ($ 25) would be transferred to the existent customer account if and only if the referred untested customer purchase item from the bon tons website. Moreover, afterward transferring of twenty five dollars ($ 25) to the account of the existing customer, the silver can only be utilized by the customer on the purchasing of new items from the companys website. The case study pertains to referral credit, in this regard the document presents a thorough interchange on the said topic. It is pertinent to state that the referral credit should be recorded in the income statement as a marketing expense and this money is spent in an effort to bring in to a greater extent clients for the company. The company is spending additional money to attain more customers and is expanding its scope. As a marketing strategy, the company is using its existing customer base to bring in more customers by offering them incentives on referring the site to other people. In the long run this additional money spent in the lick of referral credits result be beneficial for the company as it get out result in an addition in the sales and revenues. It cannot be recorded as a reduction in revenues as this will not provide a clear picture and future increase in customers and revenues cannot be attributed to this money spent. On the other hand, if twenty five dollars ($ 25) referral credit inducement offered to the Runway Discount Companys customers, the offer can bring in more new customers for the company. And the new customers would be the vital causa for increasing sales, after the sales increment, the increase should explain if twenty five dollars ($ 25) amount is recorded as a marketing expense. Thus, it is suggested that in order to provide a more accurate depiction to the investors, it is best(predicate) to record referral credit as a marketing expense (Gregory, 2011). When would Runway record the $ 25 Referral course credit ? It is relevant to know that the Runway Company would record twenty five dollars ($ 25) referral credit in its books at the time when the new customer referred by an old or existing customer, makes a purchase from Runway Companys website. When the new customer makes a purchase, the Runway Company is bound to give twenty five dollars ($ 25) referral credit to its customer. In other words twenty five dollars ($ 25) become a indebtedness of the company. However, if an existing customer refers the portal to a third person, not familiar to the website but the person after surfing the site does not make a purchase the Runway Company will not record any referral credit in its books. When the new customer makes a purchase, twenty five dollars ($ 25) will be recorded as a referral fee in the