Ivanhoe Music Shop gives its customers coupons redeemable for a poster plus a Bo Diddley CD. One coupon is isued for each dollar of sales. On the surrender of 100 coupons and $6.00 cash, the poster and CD are given to the customer. It is estimated that 80% of the coupons will be presented for redemption. Sales for the first period were $700,000, and the coupons redeemed totaled 425,000. Sales for the second period were $880,000, and the coupons redeemed totaled 740,000. Ivanhoe Music Shop bought 20,000 posters at $3.0/poster and 20,000 CDs at $7.0/CD. Prepare the following entries for the two periods, assuming all the coupons expected to be redeemed from the first period were redeemed by the end of the second period. (a) To record coupons redeemed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Ivanhoe Music Shop gives its customers coupons redeemable for a poster plus a Bo Diddley CD. One coupon is isued for each dollar of sales. On the surrender of 100 coupons and $6.00 cash, the poster and CD are given to the customer. It is estimated that 80% of the coupons will be presented for redemption. Sales for the first period were $700,000, and the coupons redeemed totaled 425,000. Sales for the second period were $880,000, and the coupons redeemed totaled 740,000. Ivanhoe Music Shop bought 20,000 posters at $3.0/poster and 20,000 CDs at $7.0/CD. Prepare the following entries for the two periods, assuming all the coupons expected to be redeemed from the first period were redeemed by the end of the second period. (a) To record coupons redeemed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

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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Question

Ivanhoe Music Shop gives its customers coupons redeemable for a poster plus a Bo Diddley CD. One coupon is issued for each dollar
of sales. On the surrender of 100 coupons and $6.00 cash, the poster and CD are given to the customer. It is estimated that 80% of the
coupons will be presented for redemption. Sales for the first period were $700,000, and the coupons redeemed totaled 425,000. Sales
for the second period were $880,000, and the coupons redeemed totaled 740,000. Ivanhoe Music Shop bought 20,000 posters at
$3.0/poster and 20,000 CDs at $7.0/CD.
Prepare the following entries for the two periods, assuming all the coupons expected to be redeemed from the first period were
redeemed by the end of the second period.
(a)
To record coupons redeemed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Period 1
Account Titles and Explanation
Debit
Credit
Premium Liability
Premium Expense
Cash
Period 2
Account Titles and Explanation
Debit
Credit

(b)
To record estimated liability. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Period 1
Account Titles and Explanation
Debit
Credit
Period 2
Account Titles and Explanation
Debit
Credit

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