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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![c. What is the ending balance in the accrued premium liability
account at the end of 2025?
Accrued Premium
Liability
Accrual for 2024 (a)
Redemptions for 2024 (b)
Accrual for 2025
Redemptions for 2025
Closing balance, Dec 31, 2025](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0a18b560-4244-4f9c-8a3f-88ca5d359cd8%2F00a68128-0436-4ec4-b779-790786879eb8%2Fyysq0c_processed.jpeg&w=3840&q=75)
Transcribed Image Text:c. What is the ending balance in the accrued premium liability
account at the end of 2025?
Accrued Premium
Liability
Accrual for 2024 (a)
Redemptions for 2024 (b)
Accrual for 2025
Redemptions for 2025
Closing balance, Dec 31, 2025
![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](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0a18b560-4244-4f9c-8a3f-88ca5d359cd8%2F00a68128-0436-4ec4-b779-790786879eb8%2Flbuxfb7_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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
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