Sycamore Candy offers an MP3 download (seven-single medley) as a premium for every five candy bar wrappers presented by customers together with $2.50. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each download code to the company is $2.25. In addition, it costs 50 cents to distribute each code. The results of the premium plan for the years 2020 and 2021 are as follows. (All purchases and sales are for cash.) $1000 2020 $1000 2021 MP3 codes purchased 250,000 330,000 Candy bars sold 2,895,400 2,743,600 Wrappers redeemed 1,200,000 1,500,000 2020 wrappers expected to be redeemed in 2021 290,000 2021 wrappers expected to be redeemed in 2022 350,000 Instructions a. Prepare the journal entries that should be made in 2020 and 2021 to record the transactions related to the premium plan of the Sycamore Candy. b. Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the balance sheet and the income statement at the end of 2020 and 2021.
Sycamore Candy offers an MP3 download (seven-single medley) as a premium for every five candy bar wrappers presented by customers together with $2.50. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each download code to the company is $2.25. In addition, it costs 50 cents to distribute each code. The results of the premium plan for the years 2020 and 2021 are as follows. (All purchases and sales are for cash.) $1000 2020 $1000 2021 MP3 codes purchased 250,000 330,000 Candy bars sold 2,895,400 2,743,600 Wrappers redeemed 1,200,000 1,500,000 2020 wrappers expected to be redeemed in 2021 290,000 2021 wrappers expected to be redeemed in 2022 350,000 Instructions a. Prepare the journal entries that should be made in 2020 and 2021 to record the transactions related to the premium plan of the Sycamore Candy. b. Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the balance sheet and the income statement at the end of 2020 and 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sycamore Candy offers an MP3 download (seven-single medley) as a premium for every five candy bar wrappers presented by customers together with $2.50. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each download code to the company is $2.25. In addition, it costs 50 cents to distribute each code. The results of the premium plan for the years 2020 and 2021 are as follows. (All purchases and sales are for cash.)
| $1000 | 2020 | $1000 | 2021 | |
| MP3 codes purchased |
250,000
|
330,000
|
||
| Candy bars sold |
2,895,400
|
2,743,600
|
||
| Wrappers redeemed |
1,200,000
|
1,500,000
|
||
| 2020 wrappers expected to be redeemed in 2021 |
290,000
|
|||
| 2021 wrappers expected to be redeemed in 2022 |
350,000
|
Instructions
a. Prepare the
b. Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the
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