The entity includes one coupon in each bag of dog food it sells for $50 per bag. In return for eight coupons, customers receive a leash. The leashes cost $10.00 each. The leashes can also be sold separately by the company at a sales price of $25 each. The entity estimates that 40 percent of the coupons will be redeemed. Data for 2020 and 2021 are as follows: 2020 Bags of dog food sold - 250,000 Leashes purchased - 9,000 Coupons redeemed - 60,000 2021 Bags of dog food sold - 300,000 Leashes purchased - 11,000 Coupons redeemed - 75,000 Prepare a working paper showing computations for unearned revenue from

The entity includes one coupon in each bag of dog food it sells for $50 per bag. In return for eight coupons, customers receive a leash. The leashes cost $10.00 each. The leashes can also be sold separately by the company at a sales price of $25 each. The entity estimates that 40 percent of the coupons will be redeemed. Data for 2020 and 2021 are as follows: 2020 Bags of dog food sold - 250,000 Leashes purchased - 9,000 Coupons redeemed - 60,000 2021 Bags of dog food sold - 300,000 Leashes purchased - 11,000 Coupons redeemed - 75,000 Prepare a working paper showing computations for unearned revenue from

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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.
Marigold Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, Marigold Company purchased 9,100 premiums at 75 cents each and sold 101,000 boxes of soap powder at $ 3.60 per box; 40,800 coupons were presented for redemption in 2020. It is estimated that 60% of the coupons will eventually be presented for redemption.Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2020. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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?
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?
to stimulate the sales of its Alladin breakfast cereal, Loptien Company places 1 coupon in each box. Five coupons are redeemable for a premium consisting of a children’s hand puppet. In 2021, the company purchases 40,000 puppets at $1.50 each and sells 480,000 boxes of Alladin at $3.75 a box. From its experience with other similar premium offers, the company estimates that 40% of the coupons issued will be mailed back for redemption. During 2021, 115,000 coupons are presented for redemption. Instructions Prepare the journal entries that should be recorded in 2021 relative to the premium plan.
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.
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
No Doubt Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, No Doubt Company purchased 8,800 premiums at 80 cents each and sold 110,000 boxes of soap powder at $3.30 per box; 44,000 coupons were presented for redemption in 2020. It is estimated that 60% of the coupons will eventually be presented for redemption. Instructions Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2020.
On the back of its cereal boxes, Tiger Cereal Company offers a premium to its customers. The premium, a toy truck, may be claimed by sending in $1 plus 10 coupons; one coupon is included in each box of cereal sold. Tiger estimates, based on past experience, that 60% of the coupons will be redeemed. During 2019, Tiger purchased 240,000 toy trucks at $1.25 each for the premium promotion and sold 5,000,000 boxes of cereal at $1.80 per box. In 2019, 2,200,000 coupons were redeemed. Required: 1. Prepare the journal entries related to the previous promotion (including sales) for 2019. 2. Show how the items related to the premium plan would be reported on the December 31, 2019, balance sheet.
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.
Phoenix Company, places a coupon in each box of its product. Customers may send in ten coupons and P3.00, and the company will send them a romantic pillow. Sufficient pillows were purchased at P5.40 a piece. During 2019, 1,260,000 boxes were sold. It was estimated that a total of 5% of the coupons will be redeemed. In 2019, 18,000 coupons were redeemed. How much is the premium expense for the year 2019?
To increase sales, DD Company inaugurated a promotional campaign on June 30, 2020. DD placed a couponfor a premium in each box of cake sold at P400. A coffee mug costing P60 is offered as premium to customers who sendin 5 coupons and a remittance of P20. The distribution cost per premium is P10. DD Company estimated that only80% of the coupons issued will be redeemed. For the six months ended December 31, 2020, the following data isavailable in terms of units:Boxes of cake sold 20,000Premiums purchased 3,000Coupons redeemed 10,000What is the estimated liability for premiums on December 31, 2020?a. P180,000 b. P150,000 c. P160,000 d. P60,000