Business
Intermediate Accounting
Sycamore Candy offers an MP3 download (seven-single medley) as a

Sycamore Candy offers an MP3 download (seven-single medley) as a premium for every five candy bar wrappers

Question:

Sycamore Candy offers an MP3 download (seven-single medley) as a premium for every five candy bar wrappers presented by customers together with $2.50. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each download code to the company is $2.25. In addition, it costs 50 cents to distribute each code. The results of the premium plan for the years 2020 and 2021 are as follows. (All purchases and sales are for cash.)

Instructions

a. Prepare the journal entries that should be made in 2020 and 2021 to record the transactions related to the premium plan of the Sycamore Candy.

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

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...

Transcribed Image Text:

2020 2021 MP3 codes purchased Candy bars sold Wrappers redeemed 2020 wrappers expected to be redeemed in 2021 2021 wrappers expected to be redeemed in 2022 250,000 2,895,400 330,000 2,743,600 1,500,000 1,200,000 290,000 350,000

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a During 2020 290000 5 X 225 50 250 14500 During 2021 To record the redemption of 1500000 wrappers t...View the full answer

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Related Book For book-img-for-question

Intermediate Accounting

ISBN: 978-1119503668

17th edition

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel

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Question Posted: Nov 28, 2019 06:25 AM

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