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(a) What amount related to the promotional program should Baylor report as a liability at December 31, 202O? Liability for the promotional program 24 (b) What amount of premium expense will Baylor report on its 2020 income statement as a result of the promotional program? Premium Expense 2$ (c) Prepare any necessary 2020 journal entries to record revenue, the liability, and coupon redemptions. Ignore any cost of goods

(a) What amount related to the promotional program should Baylor report as a liability at December 31, 202O? Liability for the promotional program 24 (b) What amount of premium expense will Baylor report on its 2020 income statement as a result of the promotional program? Premium Expense 2$ (c) Prepare any necessary 2020 journal entries to record revenue, the liability, and coupon redemptions. Ignore any cost of goods

FINANCIAL ACCOUNTING
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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Situation 3: Baylor Corp. sold 644,000 boxes of pie mix under a new sales promotion program. Each box contains one coupon that entitles the customer to a baking pan when the coupon is submitted with an additional $4.75 from the customer. Baylor pays $5 per pan and $1.25 for shipping and handling. Baylor estimates that 60% of the coupons will be redeemed even though only 96,600 coupons had been processed during 2020. Each box of pie mix is sold for $4.50, and Baylor estimates that $1 of the sale price relates to the baking pan to be awarded. Baylor follows IFRS and accounts for its promotional programs in accordance with the revenue approach and IFRS 15. (a) What amount related to the promotional program should Baylor report as a liability at December 31, 2020? Liability for the promotional program 2$ (b) What amount of premium expense will Baylor report on its 2020 income statement as a result of the promotional program? Premium Expense $ (c) Prepare any necessary 2020 journal entries to record revenue, the liability, and coupon redemptions. Ignore any cost of goods sold entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit
Transcribed Image Text:Situation 3: Baylor Corp. sold 644,000 boxes of pie mix under a new sales promotion program. Each box contains one coupon that entitles the customer to a baking pan when the coupon is submitted with an additional $4.75 from the customer. Baylor pays $5 per pan and $1.25 for shipping and handling. Baylor estimates that 60% of the coupons will be redeemed even though only 96,600 coupons had been processed during 2020. Each box of pie mix is sold for $4.50, and Baylor estimates that $1 of the sale price relates to the baking pan to be awarded. Baylor follows IFRS and accounts for its promotional programs in accordance with the revenue approach and IFRS 15. (a) What amount related to the promotional program should Baylor report as a liability at December 31, 2020? Liability for the promotional program 2$ (b) What amount of premium expense will Baylor report on its 2020 income statement as a result of the promotional program? Premium Expense $ (c) Prepare any necessary 2020 journal entries to record revenue, the liability, and coupon redemptions. Ignore any cost of goods sold entry. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit
(To record cash sale) (To record redemptions of coupons) (To adjust unearned revenue) > >
Transcribed Image Text:(To record cash sale) (To record redemptions of coupons) (To adjust unearned revenue) > >
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