Problem 13-9 Sycamore Candy Company offers an MP3 download (seven-single medley) as a premium for ev 1 answer below »
Problem 13-9 Sycamore Candy Company offers an MP3 download (seven-single medley) as a premium for every 6 candy bar wrappers presented by customers together with $2.70. 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 $2.45. In addition, it costs 50 cents to distribute each code. The results of the premium plan for the years 2014 and 2015 are as follows. (All purchases and sales are for cash.)
2014
2015 MP3 codes purchased 377,500 498,300 Candy bars sold 2,941,000 2,811,200 Wrappers redeemed 1,812,000 2,265,000 2014 wrappers expected to be redeemed in 2015 437,900 2015 wrappers expected to be redeemed in 2016 528,500
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Cancel Prepare the journal entries that should be made in 2014 and 2015 to record the transactions related to the premium plan of the Sycamore Candy Company. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 1,525.)
Account Titles and Explanation
Debit
Credit
2014
(To record the pemium inventory.)
(To record the sales.)
(To record the expense associated with the sale.)
(To record the premium liability.)
2015
(To record the pemium inventory.)
(To record the sales.)
(To record the expense associated with the sale.)
(To record the premium liability.)
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Cancel Indicate the amounts for each accounts, 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 2014 and 2015.
Amount
Account
2014
2015
Classification Inventory of Premiums $ $ Property, Plant and EquipmentSelling ExpenseCurrent LiabilityCurrent AssetStockholders’ EquityLong-term Investments Premium Liability Long-term InvestmentsProperty, Plant and EquipmentStockholders’ EquityCurrent LiabilitySelling ExpenseCurrent Asset Premium Expense Current AssetCurrent LiabilityLong-term InvestmentsProperty, Plant and EquipmentSelling ExpenseStockholders’ Equity