Related questions
Presented below are three independent situations.
1. Blossom Stamp Company records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. Blossom’s past experience indicates that only 80% of the stamps sold to licensees will be redeemed. Blossom’s liability for stamp redemptions was $14,270,000 at December 31, 2019. Additional information for 2020 is as follows.
| Stamp service revenue from stamps sold to licensees | $9,070,400 | |
| Cost of redemptions (stamps sold prior to 1/1/20) | 5,413,100 |
If all the stamps sold in 2020 were presented for redemption in 2021, the redemption cost would be $5,235,700. What amount should Blossom report as a liability for stamp redemptions at December 31, 2020?
| Liability for stamp redemptions at December 31, 2020 | $ |
2. In packages of its products, Blue Inc. includes coupons that may be presented at retail stores to obtain discounts on other Blue products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. Blue honors requests for coupon redemption by retailers up to 3 months after the consumer expiration date. Blue estimates that 60% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by Blue during 2020 is as follows.
| Consumer expiration date | 12/31/20 | |
| Total face amount of coupons issued | $874,300 | |
| Total payments to retailers as of 12/31/20 | 359,060 |
What amount should Blue report as a liability for unredeemed coupons at December 31, 2020?
| Liability for unredeemed coupons | $ |
3. Kingbird Company sold 697,300 boxes of pie mix under a new sales promotional program. Each box contains one coupon, which submitted with $4.90, entitles the customer to a baking pan. Kingbird pays $6.90 per pan and $1.40 for handling and shipping. Kingbird estimates that 70% of the coupons will be redeemed, even though only 258,600 coupons had been processed during 2020. What amount should Kingbird report as a liability for unredeemed coupons at December 31, 2020?
| Liability for unredeemed coupons at December 31, 2020 | $ |
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps
- On December 28, 2021, Tristar Communications sold 19 units of its new satellite uplink system to various customers for $15,000 each. The terms of each sale were 3/15, n/30. Tristar uses the gross method to account for sales discounts. In what year will income before tax be affected by discounts, assuming that all customers paid the net-of-discount amount on January 6, 2022? By how much? in income before tax will be byarrow_forwardEarly in 2020, Swifty Equipment Company sold 600 Rollomatics at $5,700 each. During 2020, Swifty spent $20,000 servicing the 2- year assurance warranties that accompany the Rollomatic. All sales transactions are on a cash basis. (a) Prepare 2020 entries for Swifty. Assume that Swifty estimates the total cost of servicing the warranties in the second year will be $37,000. (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. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit List of Accountsarrow_forwardOn May 3, 2020, Vaughn Company consigned 90freezers, costing $470each, to Remmers Company. The cost of shipping the freezers amounted to $870and was paid by Vaughn Company. On December 30, 2020, a report was received from the consignee, indicating that45freezers had been sold for $750each. Remittance was made by the consignee for the amount due after deducting a commission of6%, advertising of $180, and total installation costs of $310on the freezers sold. (Round answers to O decimal places, e.g. 5,275.) (a) Compute the inventory value of the units unsold in the hands of the consignee. Inventory value $ (b) Compute the profit for the consignor for the units sold. Profit on consignment sales $ (c) Compute the amount of cash that will be remitted by the consignee. Remittance from consignee $arrow_forward
- Swifty Company must make computations and adjusting entries for the following independent situations at December 31, 2026. 1. Its line of amplifiers carries a 3-year warranty against defects. On the basis of past experience, the estimated warranty costs related to dollar sales are first year after sale-2% of sales revenue; second year after sale-3% of sales revenue; and third year after sale-5% of sales revenue. Sales and actual warranty expenditures for the first 3 years of business were: Sales Revenue 2024 $764,500 2025 1,177,800 2026 1,155,500 Warranty Expenditures $6,330 16,190 64,340 Compute the amount that Swifty should report as a liability in its December 31, 2026, balance sheet. Assume that all sales are made evenly throughout each year with warranty expenses also evenly spaced relative to the rates above. Liability that should be reported on December 31, 2026 $ 2. With some of its products, Swifty includes coupons that are redeemable in merchandise. The coupons have no…arrow_forwardEarly in 2020, Cheyenne Equipment Company sold 500 Rollomatics at $5,400each. During 2020, Cheyenne spent $22,000servicing the 2-year assurance warranties that accompany the Rollomatic. All sales transactions are on a cash basis. (a) Prepare 2020 entries for Cheyenne. Assume that Cheyenne estimates the total cost of servicing the warranties in the second year will be $37,000. (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. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Creditarrow_forwardBridgeport Inc. enters into an agreement on March 1, 2020, to sell Werner Metal Company aluminum ingots. As part of the agreement, Bridgeport also agrees to repurchase the ingots on May 1, 2020, at the original sales price of $190,000 plus 3%. (a) Prepare Bridgeport's journal entry necessary on March 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles ancienter O for the amounts.) Account Titles and Explanation eTextbook and Media List of Accounts Debit Creditarrow_forward
AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,
Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSON
Intermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill Education
Financial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education