Morrisons Supermarket 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 $1.20 each. Morrisons's experience indicates that 60% of the coupons will be redeemed. During 2019, 100,000 bags of dog food were sold at $3.5 a bag, 12,000 toys were purchased, and 40,000 coupons were redeemed. Required: Prepare the journal entries that should be recorded in 2019 relative to the premium plan.
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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.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.Barlo Lunch Snacks places a coupon in each box of its cracker product. Customers may send in five coupons and $3, and the company will send them a recipe book. Sufficient books were purchased at a cost of $5 each. A total of 500,000 boxes of product were sold in 2016. It was estimated that 4% of the coupons would be redeemed. During 2016, 9,000 coupons were redeemed. What is Barlo's premium expense for 2016? A $40,000 B $4,400 C $20,000 D $8,000
- (TCO D) 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.Anton Company sells one dozen doughnuts for P500 per box. There is a promotion wherein if a customer buys 3 boxes in a single transaction, a customer received a coupon for one additional box for free. Customers can redeem coupons at any time following the month of sale of the 3 boxes before the expiration date. It is expected 60% of the customers will redeem the coupons. During 2022, the entity sold 15,000 boxes at P500 per box or P7,500,000. During 2023, the entity delivered 2,000 free additional boxes to the customers. Required: 1. Compute the stand-alone selling price of the coupons. 2. Allocate the transaction price to the products sold and the coupons. 3. Prepare the journal entry to record the sale of the products and issue of the free product coupons in 2022 4. Prepare the journal entry to record the delivery of 2,000 free additional boxes in 2023.Kane Candy Company sells candy bars for $1 each. In addition, Kane offers its customers a coffee mug in exchange for $2 and 10 candy wrappers. A coffee mug costs Kane $2.40, and the company estimates that customers will redeem 60 percent of the candy wrappers. During 2020, Kane purchased 720,000 mugs, sold 5,600,000 candy bars, and redeemed 2,800,000 candy wrappers. Instructions: 1. Prepare the journal entry to record the purchase of the coffee mugs. 2. Prepare the entry to record the sale of the candy bars. 3. Prepare the entry to record the redemption of candy wrappers, the receipt of $2 per 10 wrappers, and the delivery of the coffee mugs. 4. Prepare the adjusting entry to record additional premium expense and the estimated premium liability at Dec. 31, 2020. L
- Kane Candy Company sells candy bars for $1 each. In addition, Kane offers its customers a coffee mug in exchange for $2 and 10 candy wrappers. A coffee mug costs Kane $2.40, and the company estimates that customers will redeem 60 percent of the candy wrappers. During 2020, Kane purchased 720,000 mugs, sold 5,600,000 candy bars, and redeemed 2,800,000 candy wrappers. Instructions: 1. Prepare the journal entry to record the purchase of the coffee mugs. 2. Prepare the entry to record the sale of the candy bars. 3. Prepare the entry to record the redemption of candy wrappers, the receipt of $2 per 10 wrappers, and the delivery of the coffee mugs. 4. Prepare the adjusting entry to record additional premium expense and the estimated premium liability at Dec. 31, 2020.Dairy, Inc. offered an ice cream scoop in exchange for 8 labels of ice cream and $3.00. The ice cream scoops cost $7.00 each. Experience indicates that 45% of the coupons will be redeemed. Customers can redeem the coupons, receipts and cash through February 28, 2021. Dairy, Inc. sold 40,000 gallons of ice cream. 15,000 of the coupons were redeemed in 2020. What is the amount of premium expense to be recognized on the income statement for the year ended 2020? If all of the remaining ice cream scoops were issued in 2021, what is the amount of the premium expense to be recognized in 2021? What is the amount of the premium liability as of 12/31/20? Please provide a detailed explanation.Star Company is offering a promotion whereby a customer who purchases three boxes of chocolates at P200 per box in a single transaction receives a coupon for one free box of chocolates if the customer fills out a request form and mails it before a set expiration date. It is expected that 75% of the coupons will be redeemed.During 2021, the entity sold 60,000 boxes of chocolates at P200 per box or P12,000,000. During 2022, the entity delivered 12,000 additional free boxes of chocolates to the customers.A. What amount should be reported as stand-alone selling price of the free product coupons? 1,500,000 4,000,000 1,000,000 3,000,000 B. What amount should be reported as sales revenue from the delivery of free products in 2022? 1,800,000 1,440,000 1,200,000 720,000 C. What amount should be reported as sales revenue in 2021? 12,000,000 6,000,000 4,800,000 9,600,000
- Beauty products sold by Tradisi Berseri Bhd (TRADISI) are in boxes of RM10 per box. TRADISI includes one coupon in each box sold. In return for 4 coupons, customers receive a tote bag that the company purchases for RM2.20 each. TRADISI's experience indicates that 60 percent of the coupons will be redeemed. During 2020, 100,000 boxes of beauty products were sold, 12,000 tote bags were purchased, and 40,000 coupons were redeemed. During the first quarter of 2021, RM70,000 of beauty products were sold and 2,000 coupons were redeemed. The coupons are valid for two (2) years. REQUIRED: (a) Prepare the journal entries in relation to the provision liability that should be recorded by Tradisi Berseri Bhd in its first quarter of the year 2021. (b) Determine the premium liability that should be reported by Tradisi Berseri Bhd as at it first quarter of 2021.Ariana Corporation includes two coupons in each box of cereal box and 9 coupons are needed to be redeemed for the customer to receive a child’s toy dog. In 2020, Ariana Corporation purchased 4,700 toy dogs at $1.05 each. They sold 75,100 boxes of cereal at $4.75 per box, of which the coupons portion is valued at $.25 per box. In total, 31,500 coupons were presented for redemption in 2020. It is estimated that 40% of the coupons will eventually be redeemed. The company uses the Expense approach. Required: Prepare the journal entries required for 2020 using the Expense approach, specifically for the sales of the cereal boxes, the purchase of the toy dogs, the redeemed coupons and the accrual required at year end. Show all calculations. If the company had used the Revenue approach instead, how much revenue from the coupons redeemed would be recorded in 2020?(Customer Loyalty Program) Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2017, customers purchase products for $300,000 (with a cost of $171,000) and earn 30,000 points redeemable for future purchases. Martz expects 25,000 points to be redeemed. Martz estimates a standalone selling price of $2.50 per point (or $75,000 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Martz concludes that the points are a separate performance obligation.Instructions(a) Determine the transaction price for the product and the customer loyalty points.(b) Prepare the journal entries to record the sale of the product and related points on July 2, 2017.(c) At the end of the first reporting period (July 31, 2017), 10,000 loyalty…