On October 1, 2018, Super Soup Corp. began offering customers a Super Soup Spoon in return for 20 soup can labels. This offer expires on March 31, 2019. The cost of each soup spoon is $1.50. Based on past experience, the company estimates that only 40% of the labels will be redeemed. During 2018, the company purchased 13,000 soup spoons and sold 600,000 cans of soup at $1.20 per can (the company uses the periodic inventory method). From these sales, 180,000 labels were returned for redemption in 2018. a. Prepare the journal entry to record the purchase of 12,000 soup spoons. b. Prepare the journal entry to record the sale of 600,000 cans of soup. c. Prepare the journal entry to estimate the premium expense for 2018. d. Prepare the journal entry to record the redemption of 180,000 labels. Answer:

On October 1, 2018, Super Soup Corp. began offering customers a Super Soup Spoon in return for 20 soup can labels. This offer expires on March 31, 2019. The cost of each soup spoon is $1.50. Based on past experience, the company estimates that only 40% of the labels will be redeemed. During 2018, the company purchased 13,000 soup spoons and sold 600,000 cans of soup at $1.20 per can (the company uses the periodic inventory method). From these sales, 180,000 labels were returned for redemption in 2018. a. Prepare the journal entry to record the purchase of 12,000 soup spoons. b. Prepare the journal entry to record the sale of 600,000 cans of soup. c. Prepare the journal entry to estimate the premium expense for 2018. d. Prepare the journal entry to record the redemption of 180,000 labels. Answer:

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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