Indigo offers an MP3 download (seven-single medley) as a premium for every 5 candy bar wrappers presented by customers together with $3.50. The candy bars are sold by the company to distributors for 30¢ each. The purchase price of each download code to the company is $3.25. In addition, it costs 50¢ to distribute each code. The results of the premium plan for the years 2025 and 2026 are as follows. (All purchases and sales are for cash.) MP3 codes purchased. Candy bars sold Wrappers redeemed 2025 wrappers expected to be redeemed in 2026 2026 wrappers expected to be redeemed in 2027 2025 360,000 2,825,000 1,728,000 417,600 2026 475,200 2,546,500 2,160,000 504,000 D
Indigo offers an MP3 download (seven-single medley) as a premium for every 5 candy bar wrappers presented by customers together with $3.50. The candy bars are sold by the company to distributors for 30¢ each. The purchase price of each download code to the company is $3.25. In addition, it costs 50¢ to distribute each code. The results of the premium plan for the years 2025 and 2026 are as follows. (All purchases and sales are for cash.) MP3 codes purchased. Candy bars sold Wrappers redeemed 2025 wrappers expected to be redeemed in 2026 2026 wrappers expected to be redeemed in 2027 2025 360,000 2,825,000 1,728,000 417,600 2026 475,200 2,546,500 2,160,000 504,000 D
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Indigo offers an MP3 download (seven-single medley) as a premium for every 5 candy bar wrappers presented by customers together
with $3.50. The candy bars are sold by the company to distributors for 30¢ each. The purchase price of each download code to the
company is $3.25. In addition, it costs 50¢ to distribute each code. The results of the premium plan for the years 2025 and 2026 are as
follows. (All purchases and sales are for cash.)
MP3 codes purchased
Candy bars sold
Wrappers redeemed
2025 wrappers expected to be redeemed in 2026
2026 wrappers expected to be redeemed in 2027
2025
360,000
2,825,000
1,728,000
417,600
2026
475,200
2,546,500
2,160,000
504,000
Transcribed Image Text:Indicate the amounts for each accounts, and classifications of the items related to the premium plan that would appear on the
balance sheet and the income statement at the end of 2025 and 2026.
Account
Premium Inventory
Premium Liability
Premium Expense
2025
360000
Amount
107280
+6
2026
277200
112320
Classification
Current Asset
Current Liability
Selling Expense
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