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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

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

Box of

Cereal Sold

Shovel Sets

Purchased by Company

Boxes Top

Redeemed by Customers

October 21,000 890 12,000
November 27,000 1,083 16,050
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.

image text in transcribed

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.

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PAGE 10 PAGE 11 PAGE 12 GENERAL JOURNAL Score: 305/313 DATE POST. REF. DEBIT CREDIT ACCOUNT TITLE Inventory of Premiums 1 Nov. 30 3,249.00 2 Cash 3,249.00 3 Nov. 30 Cash 75,600.00 4 Sales 75,600.00 5 Nov. 30 Premium Expense 3,013.00 6 6 Estimated Premium Liability 3,013.00 7 Nov. 30 Estimated Premium Liability 767.00 8 Inventory of Premiums 767.00 YUMMY CEREAL COMPANY Score: 4/36 Partial Balance Sheets October, November and December, 2019 1 October November December 2 Current Assets: 3 $240.00 $288.00 $1,230.00 4 Current Liabilities: 5 $540.00 $699.00 $1,170.00

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