1. On January 1, 2024, Kent Co. introduced a premium program to stimulate sales. Kent includes one coupon in each bag of dog food it sells. In return for eight coupons plus $0.50, customers receive a leash. The leashes cost Kent $2.00 each. Kent estimates that 40 percent of the coupons will be redeemed. Kent's year-end is December 31. Data for 2024 and 2025 are as follows: Bags of dog food sold Leashes purchased Coupons redeemed 2024 700,000 29,000 220,000 Cr. Dr. Premium Expense Cr. Accrued Premium Liability a. What journal entry is needed to record premium expense for 2024 for the leashes? 2025 850,000 32,000 250,000 b. What journal entry is needed to record the coupons redeemed in 2024? Dr. Accrued Premium Liability Leash Inventory

1. On January 1, 2024, Kent Co. introduced a premium program to stimulate sales. Kent includes one coupon in each bag of dog food it sells. In return for eight coupons plus $0.50, customers receive a leash. The leashes cost Kent $2.00 each. Kent estimates that 40 percent of the coupons will be redeemed. Kent's year-end is December 31. Data for 2024 and 2025 are as follows: Bags of dog food sold Leashes purchased Coupons redeemed 2024 700,000 29,000 220,000 Cr. Dr. Premium Expense Cr. Accrued Premium Liability a. What journal entry is needed to record premium expense for 2024 for the leashes? 2025 850,000 32,000 250,000 b. What journal entry is needed to record the coupons redeemed in 2024? Dr. Accrued Premium Liability Leash Inventory

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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