Aa.20. A company includes one coupon in each box of cat food it sells. In returnfor 20 coupons and a payment of $.14, a customer receives a toy. Thecompany buys the toys in large quantities for $1.10 each.According to past experience, 40% of the coupons are never redeemed.During 20x1, 3,000 toys were purchased, 36,000 boxes of cat food weresold, and 10,000 coupons were redeemed. During 20x2, 4,000 toys werepurchased, 34,000 boxes of cat food were sold, and 15,000 coupons wereredeemed.How much will the company report as Coupon Expense in 20x2? SHOWYOUR WORK.

Expenses need to be book with amount actually spent. For balance expected expenses we have to book…

Answered: A company includes one coupon in each…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing

Section: Chapter Questions

Problem 10Q

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Edwards Co. includes one coupon in each bag of dogfood it sells. In return for four coupons, customers receive a dogtoy that the company purchases for $1.20 each. Edward’s experienceindicates that 60% of the coupons will be redeemed. During 2010,100,000 bags of dog food were sold, 12,000 toys were purchased, and40,000 coupons were redeemed. During 2011, 120,000 bags of dog foodwere sold, 16,000 toys were purchased, and 60,000 coupons wereredeemed. Instructions: Determine the premium expense to bereported in the income statement and the estimated liability forpremiums on the balance sheet for 2010 and 2011.
Brown crop sells TV products. In order to attract more consumers, Brown corp offers 1 unit of bag which can be exchanged for 10 coupons. Each bag is accompanied by 1 coupon sheet. The company estimates that customers will redeem 80% of the outstanding coupons. During 19x5 Brown Corp. has achieved sales of 600,000 TVs at a selling price of 500,000/unit and purchased 100,000 units of bags as inventory at a cost of $62,500/unit. During the offer period, 165,000 coupons were exchanged for bags by customers. Prepare:1. Journal of recording purchases of bags2. Sales recording journal3. Journal of coupon redemption by customer4. The adjusting entry to recognize the liability at 31 December 19x5
(TCO D) Edwards Co. includes one coupon in each bag of dogfood it sells. In return for four coupons, customers receive a dogtoy that the company purchases for $1.20 each. Edward’s experienceindicates that 60% of the coupons will be redeemed. During 2010,100,000 bags of dog food were sold, 12,000 toys were purchased, and40,000 coupons were redeemed. During 2011, 120,000 bags of dog foodwere sold, 16,000 toys were purchased, and 60,000 coupons wereredeemed. Instructions: Determine the premium expense to bereported in the income statement and the estimated liability forpremiums on the balance sheet for 2010 and 2011.
Ariana Corporation includes two coupons in each box of cereal box and 9 coupons are needed to be redeemed for the customer to receive a child’s toy dog. In 2020, Ariana Corporation purchased 4,700 toy dogs at $1.05 each. They sold 75,100 boxes of cereal at $4.75 per box, of which the coupons portion is valued at $.25 per box. In total, 31,500 coupons were presented for redemption in 2020. It is estimated that 40% of the coupons will eventually be redeemed. The company uses the Expense approach. Required: Prepare the journal entries required for 2020 using the Expense approach, specifically for the sales of the cereal boxes, the purchase of the toy dogs, the redeemed coupons and the accrual required at year end. Show all calculations. If the company had used the Revenue approach instead, how much revenue from the coupons redeemed would be recorded in 2020?
On 2009, Jhet Enterprises sold 485,000 boxes of cereals under a promotional program. Each box contains one coupon, which entitles the buyer to a premium that cost the company ₱75. Five coupons plus a remittance of ₱20 must be presented by the buyer to receive a premium. Jhet Enterprises estimated that 85% of the coupons will be redeemed. Actual premiums redeemed were 5,000 units. Additional info revealed that ₱10 per premium is incurred for storage and distribution. Required: Compute for the liability for the unredeemed coupons.
On 2009, Jhet Enterprises sold 485,000 boxes of cereals under a promotional program. Each box contains one coupon, which entitles the buyer to a premium that cost the company ₱75. Five coupons plus a remittance of ₱20 must be presented by the buyer to receive a premium. Jhet Enterprises estimated that 85% of the coupons will be redeemed. Actual premiums redeemed were 5,000 units. Additional info revealed that ₱10 per premium is incurred for storage and distribution. Required: Compute for the premium expense for the year.
As part of a promotion campaign, Funzy Cereal includes one coupon in each issue of various national magazines and offers a toy car in exchange for $1.00 and three coupons. The cars cost Funzy $1.50 each. Experience indicates that 4% of the coupons eventually will be redeemed. During the last month of 2021, the first month of the offer, 12 million coupons were distributed and 240,000 of the coupons were redeemed. Funzy recognizes coupon promotion expense in the period coupons are issued. What amount should Funzy report as coupon promotion expense on its income statement for the year ended December 31, 2021?
The Ri Jung Hyuk Company sold 1,500,000 boxes of cake mix during the year under a new sales promotion program. Each box contains one coupon that, submitted with P40.00 entitles the customer to a baking pan. The Ri Jung Hyuk pays P50.00 per pan. The entity treated the premiums as selling expense. The company estimates that 80% of the coupons will be redeemed even though only 900,000 coupons had been processed during the year. What amount should Ri Jung Hyuk report as a liability for unredeemed coupons at year end?
In an effort to increase sales, Alabama Company inaugurated a sales promotional campaign on June 30, 2022. The company placed a coupon redeemable for a plushy in each package of cereal sold. To receive a premium, a customer must present five (5) coupons. Each plushy cost the firm P20, while it can be sold by Alabama for P50 each. The company estimates that only 45% of the coupons issued will not be redeemed. For the six months ended December 31, 2022, the following information are available: Packages of cereal sold 170,000 Selling price per box of cereal P100 Plushies purchased 25,000 Coupons actually redeemed 80,000 (a) How much is the premium expense for the year ended December 31, 2022? (b) How much is the estimated liability for premium claims as of December 31, 2022? (c) How much is the inventory of premium items as of December 31, 2022?
Sweet Dates Company offers a premium to its customers—a glass bowl (cost to Sweet Dates is $0.90) upon return of 40 coupons. Two coupons are placed in each box of dates sold. The company estimates, on the basis of past experience, that only 70% of the coupons will ever be redeemed. During 2019, 10 million boxes of dates are sold at $0.30 each. Eight million coupons are redeemed during 2019. Sweet Dates purchased 360,000 glass bowls for the plan on January 1, 2019. Required: 1. Prepare the journal entries related to the sale of dates and the premium plan in 2019. 2. Show how the preceding items would be reported on the December 31, 2019, balance sheet.
Sterling Co. includes one coupon in each bag of dog food it sells. In return for 4 coupons, customers receive a dog toy that the company purchases for $1.50 each. Sterling's experience indicates that 60 percent of the coupons will be redeemed. In 2025, 150,000 bags of dog food were sold, 18,000 toys were purchased, and 60,000 coupons were redeemed. In 2026, 180,000 bags of dog food were sold, 24,000 toys were purchased, and 90,000 coupons were redeemed. Determine the premium expense to be reported in the income statement and the premium liability on the balance sheet for 2025 and 2026.
Moon Company includes 1 coupon in each box of soap powder that it packs, 10 coupons being redeemable for a premium consisting of a kitchen utensil. In 2014, Moon Company purchased 36,000 premiums at $1.00 each and sold 540,000 boxes of soap powder at $4.00 per box. Based on past experience, it is estimated that 60% of the coupons will be redeemed. During 2014, 114,000 coupons were presented for redemption. During 2015, 29,000 premiums were purchased at $1.10. The company sold 1,200,000 boxes of soap at $4.00 and 495,000 coupons were presented for redemption. Instructions: Prepare all entries that would be made relative to sales of soap powder and to the premium plan in both 2014 and 2015. Assume a FIFO inventory flow.

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