SOLVE THIS Bridgeport van Leeuwen operates a very busy roadside fruit and vegetable stand from May to October every year as part of hisfarming operation, which has a December 31 year end and uses ASPE. Each time a customer purchases over $10 of produce,Bridgeport gives the customer a special fruit-shaped sticker that can't be copied. If a customer collects 10 of these stickers, they canhave $10 worth of produce for no charge. The stickers must be redeemed by June 30 of the following year. During the current year,21,500 stickers were given out to customers. Bridgeport knows from experience that some stickers will never be cashed in, as thecustomer may not shop at his stand frequently enough to collect 10 stickers, or they get lost or forgotten. In previous years, 12% ofstickers have been redeemed. During the current year, 6% of the stickers given out were redeemed. Bridgeport uses the expenseapproach to account for premiums and estimates that product costs are 60% of their selling prices.Determine the amount that should be reported as premium expense on the December 31 income statement and the amount ofany liability at December 31.Premium ExpenseEstimated Liability for Premiums2$eTextbook and Media Prepare all the necessary journal entries to record the premium expense associated with the stickers and the related liability atyear end. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required,select "No Entry" for the account titles and enter 0 for the amounts.)Account Titles and ExplanationDebitCredit(To record the cost of free product given inexchange when stickers are redeemed.)(To record the liability for unredeemed stickers.)eTextbook and MediaWould the accounting of the premiums have been different if Bridgeport had followed IFRS?

A Calculation Of Premium expense Assuming that total 21500 stickers given out to customer and 6%…

Answered: rge. The stickers mu omers. Bridgeport…

Business

Accounting

rge. The stickers mu omers. Bridgeport egnough to uentlyer

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter6: Business Expenses

Section: Chapter Questions

Problem 37P

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