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.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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.
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