Yummy Candy Company offers a coffee mug as a premium for every ten 50-centavo candy bar wrapperspresented by customers together with P1.00. The purchase price of each mug to the company is P0.90; inaddition it costs P0.60 to mail each mug. The results of the premium plan for the years 20X4 and 20X5 are asfollows (assume all purchases and sales are for cash):20X420X5Coffee mugs purchased960,000800,000Candy bars sold7,500,000 9,000,000Wrappers redeemed3,800,000 5,600,00020X4 wrappers expected to be redeemed in 20X5 2,600,00020X5 wrappers expected to be redeemed in 20X63,600,000How much are the liabilities for premium as of December 31, 20X4 and December 31, 20X5, respectively?

Liabilities - It is kind of financial obligation of the company over a particular period of time.

Answered: Yummy Candy Company offers a coffee mug…

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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Your answer is partially correct. Nash Taco Palace sells 320 gift cards at $60 per gift card and 160 of the gift cards are redeemed by year-end. Nash estimates that it will have 10% breakage on its gift cards. Prepare the entry for the gift card redemption and the expected breakage for the gift cards in the current year. (Ignore Cost of Goods Sold.) (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List oll debit entries before credit entries. Round intermediate calculations to 4 decimal places, eg. 0.2456 and final answers to 0 decimal places, eg. 5,125) Account Titles and Explanation Unearned Gift Card Revenue Sales Revenue Sales Revenue (Breakage) eTextbook and Media. Debit Credit 9600
Flint Taco Palace sells 280 gift cards at $50 per gift card and 140 of the gift cards are redeemed by year-end. Flint estimates that it wi have 10% breakage on its gift cards. Prepare the entry for the gift card redemption and the expected breakage for the gift cards in the current year. (Ignore Cost of Goods Sold.) (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries. Round intermediate calculations to 4 decimal places, eg. 0.2456 and final answers to 0 decimal places, e.g. 5,125.) Account Titles and Explanation Cash Unearned Gift Card Revenue Subscriptions Revenue. Debit 14000 Credit 7000 7000
Phoenix Company, places a coupon in each box of its product. Customers may send in ten coupons and P3.00, and the company will send them a romantic pillow. Sufficient pillows were purchased at P5.40 a piece. During 2019, 1,260,000 boxes were sold. It was estimated that a total of 5% of the coupons will be redeemed. In 2019, 18,000 coupons were redeemed. How much is the premium expense for the year 2019?
(Customer Loyalty Program) Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2017, customers purchase products for $300,000 (with a cost of $171,000) and earn 30,000 points redeemable for future purchases. Martz expects 25,000 points to be redeemed. Martz estimates a standalone selling price of $2.50 per point (or $75,000 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Martz concludes that the points are a separate performance obligation.Instructions(a) Determine the transaction price for the product and the customer loyalty points.(b) Prepare the journal entries to record the sale of the product and related points on July 2, 2017.(c) At the end of the first reporting period (July 31, 2017), 10,000 loyalty…
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