Yummy Cereal Company is offering one toy shovel set for 15 box tops of its cereal. Year-to-date sales have been off, and it is hoped that this offer will stimulate demand. Each shovel set costs the company $3. The following data are available for the last 3 months of 2019:

Month		Shovel Sets	Boxes Top
	Box of	Purchased by	Redeemed by
	Cereal Sold	Company	Customers
October	21,000	890	12,000
November	24,000	1,083	16,020
December	33,000	1,695	20,745

It is estimated that only 70% of the box tops will be redeemed. The cereal sells for $2.80 per box. (Note: All sales are cash sales.)

	Required:
1.	Prepare journal entries for each month to record sales, shovel set purchases, and redemptions.
2.	Assuming Yummy prepares monthly financial statements, indicate how the inventory of premiums and the estimated liability would be disclosed on Yummys ending balance sheets for October, November, and December.

CHART OF ACCOUNTS

Yummy Cereal Company

General Ledger

	ASSETS
111	Cash
121	Accounts Receivable
132	Inventory of Premiums
152	Prepaid Insurance
181	Equipment
189	Accumulated Depreciation

	LIABILITIES
211	Accounts Payable
231	Salaries Payable
241	Estimated Premium Liability
250	Unearned Revenue
261	Income Taxes Payable

	EQUITY
311	Common Stock
331	Retained Earnings

	REVENUE
411	Sales

	EXPENSES
500	Cost of Goods Sold
511	Insurance Expense
512	Utilities Expense
521	Salaries Expense
532	Bad Debt Expense
540	Interest Expense
541	Depreciation Expense
552	Premium Expense
559	Miscellaneous Expenses
910	Income Tax Expense

1. Prepare journal entries for each month to record:

	1. The purchase of premiums for cash
	2. The sale of cereal boxes for cash
	3. The corresponding premium plan on sales made during the month
	4. The redemption of coupons during the month

General Journal Instructions

Question not attempted.

PAGE 10PAGE 11PAGE 12

GENERAL JOURNAL

Score: 0/313

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4
5
6
7
8

2. Assuming Yummy prepares monthly financial statements, indicate how the inventory of premiums and the estimated liability would be disclosed on Yummys ending balance sheets for October, November, and December.

Balance Sheet Instruction

Score: 0/36

YUMMY CEREAL COMPANY

Partial Balance Sheets

October, November and December, 2019

1		October	November	December
2	Current Assets:
3
4	Current Liabilities:
5