Sheridan Candy Company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $2.40; in addition it costs $1.60 to mail each mug. The results of the premium plan for the years 2020 and 2021 are as follows (assume all purchases and sales are for cash): 2020 2021 Coffee mugs purchased 710,000 800,000 Candy bars sold 5,700,000 6,980,000 Wrappers redeemed 2,800,000 4,160,000 2020 wrappers expected to be redeemed in 2021 2,000,000 2021 wrappers expected to be redeemed in 2022 2,700,000 Prepare the general journal entries that should be made in 2020 and 2021 related to the above plan by Sheridan Candy. Date Account Titles and Explanation Debit Credit 2020 (To record purchase of coffee mugs) 2020 (To record sale of candy bars) 2020 (To record coffee mugs offered for wrappers redeemed) 2020 (To record liability against expected redemption of wrappers) 2021 (To record purchase of coffee mugs) 2021 (To record sale of candy bars) 2021 (To record coffee mugs offered for wrappers redeemed) 2021 (To record liability against expected redemption of wrappers) 2) Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Sheridan Candy Company balance sheet and income statement at the end of 2020 and 2021.
Sheridan Candy Company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $2.40; in addition it costs $1.60 to mail each mug. The results of the premium plan for the years 2020 and 2021 are as follows (assume all purchases and sales are for cash): 2020 2021 Coffee mugs purchased 710,000 800,000 Candy bars sold 5,700,000 6,980,000 Wrappers redeemed 2,800,000 4,160,000 2020 wrappers expected to be redeemed in 2021 2,000,000 2021 wrappers expected to be redeemed in 2022 2,700,000 Prepare the general journal entries that should be made in 2020 and 2021 related to the above plan by Sheridan Candy. Date Account Titles and Explanation Debit Credit 2020 (To record purchase of coffee mugs) 2020 (To record sale of candy bars) 2020 (To record coffee mugs offered for wrappers redeemed) 2020 (To record liability against expected redemption of wrappers) 2021 (To record purchase of coffee mugs) 2021 (To record sale of candy bars) 2021 (To record coffee mugs offered for wrappers redeemed) 2021 (To record liability against expected redemption of wrappers) 2) Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Sheridan Candy Company balance sheet and income statement at the end of 2020 and 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Sheridan Candy Company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $2.40; in addition it costs $1.60 to mail each mug. The results of the premium plan for the years 2020 and 2021 are as follows (assume all purchases and sales are for cash):
| 2020 | 2021 | |||
| Coffee mugs purchased | 710,000 | 800,000 | ||
| Candy bars sold | 5,700,000 | 6,980,000 | ||
| Wrappers redeemed | 2,800,000 | 4,160,000 | ||
| 2020 wrappers expected to be redeemed in 2021 | 2,000,000 | |||
| 2021 wrappers expected to be redeemed in 2022 | 2,700,000 |
Prepare the general
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2020
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2020
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2020
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2020
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2021
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2021
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2021
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2021
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2)
Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Sheridan Candy Company balance sheet and income statement at the end of 2020 and 2021.
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