A toy company includes one prize ticket in every toy package. Upon returning 5 such tickets to the company, a customer will be sent a free action figure. In a recent year, the company sold 150,000 toys for $2 each. It is estimated that 25% of the tickets will be returned. If the action figures cost the company $4 each, what amount of liability for premium redemptions must be recorded by the company? a. $7,500 b. $30,000 c. $15,000 d. $45,000

A toy company includes one prize ticket in every toy package. Upon returning 5 such tickets to the company, a customer will be sent a free action figure. In a recent year, the company sold 150,000 toys for $2 each. It is estimated that 25% of the tickets will be returned. If the action figures cost the company $4 each, what amount of liability for premium redemptions must be recorded by the company? a. $7,500 b. $30,000 c. $15,000 d. $45,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 15RE: GameDay sells recreational vehicles along with secure parking storage to customers. Game Day sells...

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Palmer Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 3 boxtops from Palmer Frosted Flakesboxes and P2. The company estimates that 60% of the boxtops will be redeemed. In 2020, the company sold 675,000 boxesof Frosted Flakes and customers redeemed 330,000 boxtops receiving 110,000 bowls. If the bowls cost Palmer Company P6each, how much liability for outstanding premiums should be recorded at the end of 2020?a. P540,000 c. P150,000b. P100,000 d. P276,000
Glam company offers customers a pottery cereal bowl if they send in three boxtops from its products and P10. The entity estimated that 60% of the boxtops will be redeemed. During the current year, the entity sold 675,000 boxes and customers redeemed 330,000 boxtops receiving 110,000 bowls. The cost of each bowl is P25. 1a. What is the premium expense for the current year? a. 1,650,000 b. 2,025,000 c. 4,550,000 d. 6,075,000 1b. What is the liability for outstanding premiums at year-end? a. 250,000 b. 375,000 c. 625,000 d. 875,000
Coronado Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 3 boxtops from Coronado Frosted Flakes boxes and $1. The company estimates that 60% of the boxtops will be redeemed. In 2021, the company sold 1360000 boxes of Frosted Flakes and customers redeemed 660000 boxtops receiving 220000 bowls. If the bowls cost Coronado Company $3 each, how much liability for outstanding premiums should be recorded at the end of 2021? $156000 $280000 $104000 $544000
Swifty Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 3 boxtops from Swifty Frosted Flakes boxes and $2. The company estimates that 60% of the boxtops will be redeemed. In 2021, the company sold 1355000 boxes of Frosted Flakes and customers redeemed 660000 boxtops receiving 220000 bowls. If the bowls cost Swifty Company $4 each, how much liability for outstanding premiums should be recorded at the end of 2021? O $542000 O $278000 O $102000 O $204000
On the back of its cereal boxes, Tiger Cereal Company offers a premium to its customers. The premium, a toy truck, may be claimed by sending in $1 plus 10 coupons; one coupon is included in each box of cereal sold. Tiger estimates, based on past experience, that 60% of the coupons will be redeemed. During 2019, Tiger purchased 240,000 toy trucks at $1.25 each for the premium promotion and sold 5,000,000 boxes of cereal at $1.80 per box. In 2019, 2,200,000 coupons were redeemed. Required: 1. Prepare the journal entries related to the previous promotion (including sales) for 2019. 2. Show how the items related to the premium plan would be reported on the December 31, 2019, balance sheet.
Anton Company sells one dozen doughnuts for P500 per box. There is a promotion wherein if a customer buys 3 boxes in a single transaction, a customer received a coupon for one additional box for free. Customers can redeem coupons at any time following the month of sale of the 3 boxes before the expiration date. It is expected 60% of the customers will redeem the coupons. During 2022, the entity sold 15,000 boxes at P500 per box or P7,500,000. During 2023, the entity delivered 2,000 free additional boxes to the customers. Required: 1. Compute the stand-alone selling price of the coupons. 2. Allocate the transaction price to the products sold and the coupons. 3. Prepare the journal entry to record the sale of the products and issue of the free product coupons in 2022 4. Prepare the journal entry to record the delivery of 2,000 free additional boxes in 2023.
GameDay sells recreational vehicles along with secure parking storage to customers. Game Day sells the FB7 model for 62,000, and this price includes one year of secure parking storage. GameDay also sell secure parking storage separately for 8,000 per year, and customers can purchase the FB7 model without secure parking storage for 60,000. If a customer purchases the FB7 model with secure parking storage, how should GameDay allocate the transaction price?
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GoodBuy sells gift cards redeemable for GoodBuy products either in store or online. During 2024, GoodBuy sold $1,040,000 of gift cards, and $900,000 of the gift cards were redeemed for products. As of December 31, 2024, $33,000 of the remaining gift cards had passed the date at which GoodBuy concludes that the cards will never be redeemed. How much gift card revenue should GoodBuy recognize in 2024?
Crane Bakery began selling gift cards in 2025. Based on industry norms, they expect that 30% of the gift cards will not be redeemed. In 2025, the bakery sold gift cards with a value of $2000. During that period, gift cards with a value of $500 were redeemed. The amount of revenue that Crane will recognize in 2025 with regard to the gift cards is O $650 O $500 O $2000 O $714
Crane Company buys a delivery van with a list price of $55000. The dealer grants a 12% reduction in list price and an additional 1% cash discount on the net price if payment is made in 30 days. Sales taxes amount to $750 and the company paid an extra $650 to have a special device installed. What should be the recorded cost of the van? O $49316. O $48666. O $47916. O $49302.
as show in the pic