Question
Js Music Shop gives its customers coupons redeemable for a poster plus a CD. One coupon is issued for each one-dollar of sales. On the
Js Music Shop gives its customers coupons redeemable for a poster plus a CD. One coupon is issued for each one-dollar of sales. On the surrender of 25 coupons and $5.00 cash, J gives the customer a poster and a CD. J estimates 25% of the coupons will be presented for redemption. Js coupons do not expire until 06-30-17. Js sales (30% on a credit basis and 70% on a cash basis) for 2015 totaled $1,427,000; cost of goods sold totaled $515,000. During 2015, J purchased (on a cash basis) 15,000 posters at $0.20/poster and 15,000 CDs at $1.75/CD. During 2015, Js customers redeemed 176,000 coupons.
a. Prepare the entries that represents Js 2015 sales and COGS and estimated premium expense.
b. Prepare the entry that represents Js 2015 purchase of the posters and CDs.
c. Prepare the entry that represents Js 2015 coupon redemptions.
d. For the year ended 12-31-15, what is Js gross profit?
e. For the year ended 12-31-15, what is Js coupon-related, i.e., premium, expense?
f. As of 12-31-15, what is Js coupon-related, i.e., premium, liability?
g. As of 12-31-15, what is Js poster and CD supplies amount?
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