To stimulate the sales of its Alladin breakfast cereal, Loptien Company places 1 coupon in each box.
Question:
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 off ers, 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.
CouponA coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
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Inventory of Premiums 60000 Cash 60000 To record purchase of 40000 puppets at 150 each D...View the full answer
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Related Book For 
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
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