Question
Paige Candy Company offers a coffee mug as a premium for every ten 50-cent candy bar wrappers presented by customers together with $1.00. The purchase
Paige Candy Company offers a coffee mug as a premium for every ten 50-cent candy bar wrappers presented by customers together with $1.00. The purchase price of each mug to the company is 90 cents; in addition it costs 60 cents to mail each mug. It is assumed that 30% of the wrappers will be returned for the coffee cups. The results of the premium plan for the years 2010 and 2011 are as follows (assume all purchases and sales are for cash):
| 2010 | 2011 |
Coffee mugs purchased | 160,000 | 150,000 |
Candy bars sold | 5,600,000 | 6,750,000 |
Wrappers redeemed | 800,000 | 1,800,000 |
Instructions
Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Paige Candy Company balance sheet and income statement at the end of 2010 and 2011. Space is included for T-accounts,
Note: After each account, in parenthesis, indicate debt or credit
Account | Amount | Account | Amount |
2010 Income statement |
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2010 Balance Sheet |
| 2011 Balance Sheet |
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