Cheyenne offers an MP3 download (seven-single medley) as a premium for every 6 candy bar wrappers presented by customers together with $3.05. 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 $2.80. 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.) 2020 2021 MP3 codes purchased 315,000 415,800 Candy bars sold 2,630,800 2,667,200 Wrappers redeemed 1,512,000 1,890,000 2020 wrappers expected to be redeemed in 2021 365,400 2021 wrappers expected to be redeemed in 2022 441,000 Prepare the journal entries that should be made in 2020 and 2021 to record the transactions related to the premium plan of the Cheyenne. (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 2020 (To record the premium inventory.) (To record the sales.) (To record the expense associated with the sale.) (To record the premium liability.) 2021 (To record the premium inventory.) (To record the sales.) (To record the expense associated with the sale.) (To record the premium liability.) 2) 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 2020 and 2021. Amount Account 2020 2021 Classification Inventory of Premiums $ $ Stockholders' EquityLong-term InvestmentsCurrent LiabilityProperty, Plant and EquipmentSelling ExpenseCurrent Asset Premium Liability Long-term InvestmentsStockholders' EquityCurrent AssetProperty, Plant and EquipmentCurrent LiabilitySelling Expense Premium Expense

Cheyenne offers an MP3 download (seven-single medley) as a premium for every 6 candy bar wrappers presented by customers together with $3.05. 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 $2.80. 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.) 2020 2021 MP3 codes purchased 315,000 415,800 Candy bars sold 2,630,800 2,667,200 Wrappers redeemed 1,512,000 1,890,000 2020 wrappers expected to be redeemed in 2021 365,400 2021 wrappers expected to be redeemed in 2022 441,000 Prepare the journal entries that should be made in 2020 and 2021 to record the transactions related to the premium plan of the Cheyenne. (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 2020 (To record the premium inventory.) (To record the sales.) (To record the expense associated with the sale.) (To record the premium liability.) 2021 (To record the premium inventory.) (To record the sales.) (To record the expense associated with the sale.) (To record the premium liability.) 2) 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 2020 and 2021. Amount Account 2020 2021 Classification Inventory of Premiums $ $ Stockholders' EquityLong-term InvestmentsCurrent LiabilityProperty, Plant and EquipmentSelling ExpenseCurrent Asset Premium Liability Long-term InvestmentsStockholders' EquityCurrent AssetProperty, Plant and EquipmentCurrent LiabilitySelling Expense Premium Expense

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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Question

	2020	2021
MP3 codes purchased	315,000	415,800
Candy bars sold	2,630,800	2,667,200
Wrappers redeemed	1,512,000	1,890,000
2020 wrappers expected to be redeemed in 2021	365,400
2021 wrappers expected to be redeemed in 2022		441,000

Prepare the journal entries that should be made in 2020 and 2021 to record the transactions related to the premium plan of the Cheyenne. (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
2020


(To record the premium inventory.)


(To record the sales.)



(To record the expense associated with the sale.)


(To record the premium liability.)
2021


(To record the premium inventory.)


(To record the sales.)




(To record the expense associated with the sale.)


(To record the premium liability.)

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 2020 and 2021.

	Amount
Account	2020	2021	Classification
Inventory of Premiums	$	$	Stockholders' EquityLong-term InvestmentsCurrent LiabilityProperty, Plant and EquipmentSelling ExpenseCurrent Asset
Premium Liability			Long-term InvestmentsStockholders' EquityCurrent AssetProperty, Plant and EquipmentCurrent LiabilitySelling Expense
Premium Expense

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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