SNM Bhd offers coupons to its customers in an effort to increase its annual sales. The company places 1 coupon in each packet of Product A. Customers can exchange 10 coupons for 1 decorative clock. In 2018, SNM Bhd purchases in cash 2,500 units of decorative clock at RM10.00 each. The company also sold 50,000 units of Product A at a price of RM20.00 each. SNM Bhd estimated that 40% of the coupons will be redeemed. As of 31 December 2018, only 15,000 coupons were presented for redemption. REQUIRED: Prepare the necessary journal entries for SNM Bhd during the year 2018. Please show your calculations. (a) Determine the asset and liability that relate to the above transactions that would appear on 31 December 2018 Statement of Financial Position. (b)

SNM Bhd offers coupons to its customers in an effort to increase its annual sales. The company places 1 coupon in each packet of Product A. Customers can exchange 10 coupons for 1 decorative clock. In 2018, SNM Bhd purchases in cash 2,500 units of decorative clock at RM10.00 each. The company also sold 50,000 units of Product A at a price of RM20.00 each. SNM Bhd estimated that 40% of the coupons will be redeemed. As of 31 December 2018, only 15,000 coupons were presented for redemption. REQUIRED: Prepare the necessary journal entries for SNM Bhd during the year 2018. Please show your calculations. (a) Determine the asset and liability that relate to the above transactions that would appear on 31 December 2018 Statement of Financial Position. (b)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 11P

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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
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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As part of a promotion campaign, Lime 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 Lime $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 million of the coupons were redeemed. Lime recognizes coupon promotion expense in the period coupons are issued. What amount should Lime report as coupon promotion expense on its December 31, 2021, income statement? A. $0. B. $80,000. C. $40,000. D. $120,000
Energetic Company includes one coupon in each box of laundry soap it sells for P500 each. A towel costing P100 and with a selling price of P120 is offered as a premium to customers who send in 10 coupons and a remittance of P20. The following are the information available (see image below).Energetic’s experience indicates that only 30% of the coupons will be redeemed. (Do not round off during computation)How much is the Total Revenue to be recognized in 2021?
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Balley Co. includes one coupon in each bag of dog food it sells. In return for 3 coupons, customers receive a dog toy that the company purchases for P1.50 each. Balley's experience indicates that 60 percent of the coupons will be redeemed. During 2004, 100,000 bags of dog food were sold, 12,000 toys were purchased, and 45,000 coupons were redeemed. During 2005, 120,000 bags of dog food were sold, 16,000 toys were purchased, and 60,000 coupons were redeemed. Requirements: a. Compute for the premium expenses in 2004 and 2005, respectively. b. Compute for the liabilities for premium as of December 31, 2004 and December 31, 2005, respectively.
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?
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