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rge. The stickers mu omers. Bridgeport egnough to uentlyer

rge. The stickers mu omers. Bridgeport egnough to uentlyer

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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Bridgeport van Leeuwen operates a very busy roadside fruit and vegetable stand from May to October every year as part of his farming operation, which has a December 31 year end and uses ASPE. Each time a customer purchases over $10 of produce, Bridgeport gives the customer a special fruit-shaped sticker that can't be copied. If a customer collects 10 of these stickers, they can have $10 worth of produce for no charge. The stickers must be redeemed by June 30 of the following year. During the current year, 21,500 stickers were given out to customers. Bridgeport knows from experience that some stickers will never be cashed in, as the customer may not shop at his stand frequently enough to collect 10 stickers, or they get lost or forgotten. In previous years, 12% of stickers have been redeemed. During the current year, 6% of the stickers given out were redeemed. Bridgeport uses the expense approach to account for premiums and estimates that product costs are 60% of their selling prices. Determine the amount that should be reported as premium expense on the December 31 income statement and the amount of any liability at December 31. Premium Expense Estimated Liability for Premiums 2$ eTextbook and Media
Transcribed Image Text:Bridgeport van Leeuwen operates a very busy roadside fruit and vegetable stand from May to October every year as part of his farming operation, which has a December 31 year end and uses ASPE. Each time a customer purchases over $10 of produce, Bridgeport gives the customer a special fruit-shaped sticker that can't be copied. If a customer collects 10 of these stickers, they can have $10 worth of produce for no charge. The stickers must be redeemed by June 30 of the following year. During the current year, 21,500 stickers were given out to customers. Bridgeport knows from experience that some stickers will never be cashed in, as the customer may not shop at his stand frequently enough to collect 10 stickers, or they get lost or forgotten. In previous years, 12% of stickers have been redeemed. During the current year, 6% of the stickers given out were redeemed. Bridgeport uses the expense approach to account for premiums and estimates that product costs are 60% of their selling prices. Determine the amount that should be reported as premium expense on the December 31 income statement and the amount of any liability at December 31. Premium Expense Estimated Liability for Premiums 2$ eTextbook and Media
Prepare all the necessary journal entries to record the premium expense associated with the stickers and the related liability at year end. (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 0 for the amounts.) Account Titles and Explanation Debit Credit (To record the cost of free product given in exchange when stickers are redeemed.) (To record the liability for unredeemed stickers.) eTextbook and Media Would the accounting of the premiums have been different if Bridgeport had followed IFRS?
Transcribed Image Text:Prepare all the necessary journal entries to record the premium expense associated with the stickers and the related liability at year end. (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 0 for the amounts.) Account Titles and Explanation Debit Credit (To record the cost of free product given in exchange when stickers are redeemed.) (To record the liability for unredeemed stickers.) eTextbook and Media Would the accounting of the premiums have been different if Bridgeport had followed IFRS?
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