The image depicts a journal entry template used in accounting to record various transactions. It consists of columns for "Account Titles and Explanation," "Debit," and "Credit." The template provides a structured format for entering financial data related to inventory, sales, and expenses. Below is a description of the sections:1. **Account Titles and Explanation**: This column is used to specify the account involved in each transaction and to provide a brief explanation of the entry. 2. **Debit**: This column is used to record debits. Debits increase asset or expense accounts and decrease liability, revenue, or equity accounts.3. **Credit**: This column is used to record credits. Credits increase liability, revenue, or equity accounts and decrease asset or expense accounts.The template includes sections for recording:- **Premium Inventory**: Includes a space to record the initial inventory of premium items, detailing debits and credits for inventory management. - **Sales**: Allows for the recording of sales transactions, including the debit and credit entries associated with sales activities. - **Expenses Associated with the Sale**: Provides space to enter expenses incurred as a result of the sales, with corresponding debits and credits. - **Premium Liability**: Used to record any liabilities incurred related to premium items, with appropriate debit and credit entries.This structure helps ensure accurate and organized financial record-keeping. Larkspur Golf Stores, Inc. operates a chain of golf equipment stores in the Western United States. In 2017, the company ran a promotion, providing customers with a coupon each time a customer bought a dozen of a specific brand of golf balls. After accumulating five coupons, a customer could present the coupons to the store in exchange for a free golf hat. In 2017, Larkspur purchased 1,500 of the hats for the promotion at $7 each and sold 9,300 dozen golf balls eligible for the promotion at $50 per dozen. Customers presented 3,800 of the coupons for redemption in 2017. Customers have until June 30, 2018, to present coupons in exchange for a free hat. Estimates indicate that a total of 50% of the coupons will eventually be presented for redemption.Prepare all the entries that would be made relative to sales of the golf balls included in the promotion and to the golf hat premium plan in 2017. (*If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.*)

Entry:- Premium inventory a/c ....................To Cash a/c Cash a/c ................................To Sales a/c Premium expense a/c....................dr` .................................To Premium inventory a/c Premium expense a/c......................dr ..............To Premium Liability a/c Particulars Debit Credit Premium inventory a/c $ 10,500 ....................To Cash a/c $ 10,500 (being purchase of premium inventory of 1,500 golf hats @$7 per hat amounting to (1500*7 = $8,400) now recorded) Cash a/c $4,65,000 ................................To Sales a/c $4,65,000 (to record sales @$50 per dozen for 9,300 dozens amounting to (50 * 9,300 = $565,000) Premium expense a/c....................dr` $ 5,320 .................................To Premium inventory a/c $ 5,320 (being expense related to 3,800 coupons redeemed now recorded amounting to (3800 / 5 )*7 =$5,320) (since one hat is given for 5 coupons redeemed) Premium expense a/c......................dr $ 1,190 ..............To Premium Liability a/c $ 1,190 (to record the amount of premium liability) ( see note below) amount of premium liability calculated as follows: Total expectation is that 50% of coupons will be redeemed => 9,300 *50% =4,650.are expected to be redeemed coupons redeemed during the year = 3,800. => 4,650 - 3,800 =850 are expected to be redeemed in future. the liability value of 850 coupons will be (850 / 5) *$7 =$1,190. (this is because for every 5 coupons $7 worth hat will be given)

Answered: Larkspur Golf Stores, Inc. operates a…

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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The image depicts a journal entry template used in accounting to record various transactions. It consists of columns for "Account Titles and Explanation," "Debit," and "Credit." The template provides a structured format for entering financial data related to inventory, sales, and expenses. Below is a description of the sections:

1. **Account Titles and Explanation**: This column is used to specify the account involved in each transaction and to provide a brief explanation of the entry.

2. **Debit**: This column is used to record debits. Debits increase asset or expense accounts and decrease liability, revenue, or equity accounts.

3. **Credit**: This column is used to record credits. Credits increase liability, revenue, or equity accounts and decrease asset or expense accounts.

The template includes sections for recording:

- **Premium Inventory**: Includes a space to record the initial inventory of premium items, detailing debits and credits for inventory management.

- **Sales**: Allows for the recording of sales transactions, including the debit and credit entries associated with sales activities.

- **Expenses Associated with the Sale**: Provides space to enter expenses incurred as a result of the sales, with corresponding debits and credits.

- **Premium Liability**: Used to record any liabilities incurred related to premium items, with appropriate debit and credit entries.

This structure helps ensure accurate and organized financial record-keeping.

Transcribed Image Text:Larkspur Golf Stores, Inc. operates a chain of golf equipment stores in the Western United States. In 2017, the company ran a promotion, providing customers with a coupon each time a customer bought a dozen of a specific brand of golf balls. After accumulating five coupons, a customer could present the coupons to the store in exchange for a free golf hat. In 2017, Larkspur purchased 1,500 of the hats for the promotion at $7 each and sold 9,300 dozen golf balls eligible for the promotion at $50 per dozen. Customers presented 3,800 of the coupons for redemption in 2017. Customers have until June 30, 2018, to present coupons in exchange for a free hat. Estimates indicate that a total of 50% of the coupons will eventually be presented for redemption. Prepare all the entries that would be made relative to sales of the golf balls included in the promotion and to the golf hat premium plan in 2017. (*If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.*)

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