Premiums. Irwin Music Shop gives its customers coupons redeemable for a poster plus a Bo Diddley CD. One coupon is issued for each dollar of sales. On the surrender of 100 coupons and $6.00 cash, the poster and CD are given to the customer. It is estimated that 80% of the coupons will be presented for redemption. Sales for the first period were $700,000, and the coupons redeemed totaled 425,000. Sales for the second period were $860,000, and the coupons redeemed totaled 755,000. Irwin Music Shop bought 20,000 posters at $2.50/poster and 20000 CDs at 7.50 dollars per cd. Prepare journal entries for period 1 and period 2. Record entry for estimated liability

Premiums. Irwin Music Shop gives its customers coupons redeemable for a poster plus a Bo Diddley CD. One coupon is issued for each dollar of sales. On the surrender of 100 coupons and $6.00 cash, the poster and CD are given to the customer. It is estimated that 80% of the coupons will be presented for redemption. Sales for the first period were $700,000, and the coupons redeemed totaled 425,000. Sales for the second period were $860,000, and the coupons redeemed totaled 755,000. Irwin Music Shop bought 20,000 posters at $2.50/poster and 20000 CDs at 7.50 dollars per cd. Prepare journal entries for period 1 and period 2. Record entry for estimated liability

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 22P

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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.
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Dolores’ Music Emplorium carries a wide variety of music promotion techniques- warranties and premiums- to attract customers.Musical instruments and sound equipment are sold in a one-year warranty for replacement of parts and labor. The estimated warranty cost, based on past experiences, is 2% on sales.The premium is offered on the recorded and sheet music. Customers receive coupon for each peso spent on recorded music or sheet music. Customers may exchange 200 cupons and P20 for an Am/PM radio. Dolores pays P34 for each radio and estimates that 60% of the coupons will be redeemed.Dolores sales for 2010 were P 57,600,000- P 43,200,000 from musical instrument and sound equipment and P 14,400,000 from recorded music and sheet music. Replacement parts and labor for warranty work totaled P 1,312,000. 52,000 AM/FM radio was purchased and 9,600,000 coupons were redeemed in 2020.The accrual method is used by Dolores to account for the warranty and premium costs for financial reporting…
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