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 2016, 10 million boxes of dates are sold, for cash, at $0.30 each. Eight million coupons are redeemed during 2016. Sweet Dates purchased 360,000 glass bowls for the plan on January 1, 2016. Required: 1. Prepare the journal entries related to the sale of dates and the premium plan in 2016. 2. Show how the preceding items would be reported on the December 31, 2016, balance sheet.

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 2016, 10 million boxes of dates are sold, for cash, at $0.30 each. Eight million coupons are redeemed during 2016. Sweet Dates purchased 360,000 glass bowls for the plan on January 1, 2016. Required: 1. Prepare the journal entries related to the sale of dates and the premium plan in 2016. 2. Show how the preceding items would be reported on the December 31, 2016, balance sheet.

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.
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Victoria Company sells bedsheets for P3,000 per set. There is a promotion wherein if a customer buys 4 sets in a single transaction, the customer receives a coupon for one additional set for free. Customers should go to the entity's website, fill out a request form, input the coupon number and submit online before the expiration date. It is expected that 80% of the coupons will be redeemed. During 2022, the entity sold 1,000 sets at P3,000 per set or P3,000,000. During 2023, the entity delivered 75 free additional sets. Compute the deferred revenue from coupons on December 31, 2023.
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Ben and Co. inaugurated a sales promotion campaign on May 31, 2019, whereby Ben placed a coupon in each package of chocolate sold, the coupons being redeemable for a premium. Each premium costs Ben P 50 and a customer to receive a coupon must present five coupons. Ben estimated that only 60 % of the coupon issued would be redeemed. For the seven months ended Dec. 3, 2019, the following information is available: Packages of chocolates sold 400,000 Premium purchased 30,000 Coupons redeemed 100,000 How much is the estimated liability for premium claims outstanding at Dec. 31, 2019? * A.P 180,000 B.P 140,000 C.P 240,000 D.P 100,000
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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.
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