Sunland Candy Company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $2.40; in addition it costs $1.60 to mail each mug. The results of the premium plan for the years 2020 and 2021 are as follows (assume all purchases and sales are for cash): 2020 2021 Coffee mugs purchased 750,000 820,000 Candy bars sold 5,600,000 6,760,000 Wrappers redeemed 2,700,000 4,250,000 2020 wrappers expected to be redeemed in 2021 1,900,000 2021 wrappers expected to be redeemed in 2022 2,680,000 Part 1 Partially correct answer icon Your answer is partially correct. Prepare the general journal entries that should be made in 2020 and 2021 related to the above plan by Sunland Candy. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 2020 (To record purchase of coffee mugs) 2020 (To record sale of candy bars) 2020 (To record coffee mugs offered for wrappers redeemed) 2020 (To record liability against expected redemption of wrappers) 2021 (To record purchase of coffee mugs) 2021 (To record sale of candy bars) 2021 (To record coffee mugs offered for wrappers redeemed) 2021 (To record liability against expected redemption of wrappers) List of Accounts Part 2 Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Sunland Candy Company balance sheet and income statement at the end of 2020 and 2021.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 21E: Cash Rebates On January 1, 2020, Fro-Yo Inc. began offering customers a cash rebate of 5.00 if the...

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Part 1

Partially correct answer icon

Your answer is partially correct.

Prepare the general journal entries that should be made in 2020 and 2021 related to the above plan by Sunland Candy. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
2020

	(To record purchase of coffee mugs)
2020

	(To record sale of candy bars)
2020


	(To record coffee mugs offered for wrappers redeemed)
2020

	(To record liability against expected redemption of wrappers)
2021

	(To record purchase of coffee mugs)
2021

	(To record sale of candy bars)
2021



	(To record coffee mugs offered for wrappers redeemed)
2021

	(To record liability against expected redemption of wrappers)

List of Accounts

Part 2

Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Sunland Candy Company balance sheet and income statement at the end of 2020 and 2021.

Balance Sheet

Account Name		Class		2020		2021

		$		$

Income Statement

Account Name		Class		2020		2021

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	2020	2021
Coffee mugs purchased	750,000	820,000
Candy bars sold	5,600,000	6,760,000
Wrappers redeemed	2,700,000	4,250,000
2020 wrappers expected to be redeemed in 2021	1,900,000
2021 wrappers expected to be redeemed in 2022		2,680,000