Revenue Recognition Footnote

9 Months Ended

Oct. 31, 2020

RevenueRecognitionAndDeferredRevenueAbstract

Rvenue Recognition

NOTE 11 – REVENUE RECOGNITION:

The Company recognizes sales at the point of purchase when the customer takes possession of the merchandise and pays for the purchase, generally with cash or credit. Sales from purchases made with Cato credit, gift cards and layaway sales from stores are also recorded when the customer takes possession of the merchandise. E-commerce sales are recorded when the risk of loss is transferred to the customer. Gift cards are recorded as deferred revenue until they are redeemed or forfeited. Layaway sales are recorded as deferred revenue until the customer takes possession or forfeits the merchandise. Gift cards do not have expiration dates. A provision is made for estimated merchandise returns based on sales volumes and the Company’s experience; actual returns have not varied materially from historical amounts. A provision is made for estimated write-offs associated with sales made with the Company’s proprietary credit card. Amounts related to shipping and handling billed to customers in a sales transaction are classified as Other revenue and the costs related to shipping product to customers (billed and accrued) are classified as Cost of goods sold.

The Company offers its own proprietary credit card to customers. All credit activity is performed by the Company’s wholly-owned subsidiaries. None of the credit card receivables are secured. The Company estimated uncollectible amounts of $,311000 and $,670000 for the nine months ended October 31, 2020 and November 2, 2019, respectively, on sales purchased on the Company’s proprietary credit card of $11.1 million and $20.3 million for the nine months ended October 31, 2020 and November 2, 2019, respectively.

The following table provides information about receivables and contract liabilities from contracts with customers (in thousands):

	Balance as of
		October 31, 2020		February 1, 2020
Proprietary Credit Card Receivables, net	$	10,241	$	15,241
Gift Card Liability	$	6,021	$	7,658