In 2021, Holyoak Inc. offers a coupon for $20 off qualifying purchases of its new line of products. Holyoak sold 10,200 of these products during the year. By year-end of 2021, 7,300 coupons had been redeemed and the $20 reduction of purchase price provided to customers. Holyoak's historical experience with such coupons indicates that 85% of customers use the coupon. Holyoak recognizes coupon expense in the period coupons are issued. What is the coupon promotion liability that Holyoak should report in its December 31, 2021, balance sheet? Multiple Choice O O O $20,400. $27,400. $17,200. $19,340.

In 2021, Holyoak Inc. offers a coupon for $20 off qualifying purchases of its new line of products. Holyoak sold 10,200 of these products during the year. By year-end of 2021, 7,300 coupons had been redeemed and the $20 reduction of purchase price provided to customers. Holyoak's historical experience with such coupons indicates that 85% of customers use the coupon. Holyoak recognizes coupon expense in the period coupons are issued. What is the coupon promotion liability that Holyoak should report in its December 31, 2021, balance sheet? Multiple Choice O O O $20,400. $27,400. $17,200. $19,340.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 3MC: During 2019, R Corp., a manufacturer of chocolate candies, contracted to purchase 100,000 pounds of...

See similar textbooks

Similar questions

Gear Up Co. pays 65% of its purchases in the month of purchase, 30% in the month after the purchase, and 5% in the second month following the purchase. What are the cash payments if it made the following purchases in 2018?
During 2020, STU Company sold 500,000 boxes of brownies mix under a new sales promotional program. Each box contains one coupon, which when submitted with P40 entitles the customer a roll of baking sheet paper . ABC pays P50 per pan and P5 for handling and shipping. ABC estimates that 80% of the coupon will be redeemed, even though only 300,000 coupons have been processed during the year. What amount should ABC report as liability for unredeemed coupons as of December 31, 2020?
During 2021, Thurs Company offered a P30 cash rebate coupon to customers who purchased one of its new line ofproducts. The company sold 20,000 of these products during 2021. By the end of 2021, 15,200 of the rebates had beenclaimed and 14,200 had been paid. The historical experience with such rebates indicated that 85% of customers claim therebates. What amount should be reported as rebate expense for 2021?a. 600,000 c. 456,000b. 510,000 d. 426,000
38. In 2021, Davidson Inc. offers a coupon for $20 off qualifying purchases of its new line of products. Davidson sold 10,000 of these products during the year. By year-end of 2021, 7,100 coupons had been redeemed and the $20 reduction of purchase price provided to customers. Davidson's historical experience with such coupons indicates that 85% of customers use the coupon. Davidson recognizes coupon expense in the period coupons are issued. What is the coupon promotion liability that Davidson should report in its December 31, 2021, balance sheet? A. $28,000. B. $20,000. C. $18,000. D. $19,000.
During 2021, Truffle Company sold 500,000 boxes of hotcakes under a new sales promotional program. Each box contains one coupon, which when submitted with P16, entitles the customer to a baking pan. Truffle pays P20 per pan and P2 for handling and shipping. Truffle estimate that 80% of the coupons will be redeemed, even though only 300,000 coupons had been processed during 2021. What amount should Truffle report as a liability for unredeemed coupons at December 31, 2021?
Marigold Company includes one coupon in each box of soap powder that it packs, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2020, Marigold Company purchased 9,100 premiums at 75 cents each and sold 101,000 boxes of soap powder at $ 3.60 per box; 40,800 coupons were presented for redemption in 2020. It is estimated that 60% of the coupons will eventually be presented for redemption.Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2020. (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.)
Edmonds Company includes 1 coupon in each box of soap powder that it packs, and 5 coupons are redeemable for a premium (a kitchen utensil). In 2020, Edmonds Company purchased 10,000 premiums at 50 cents each and sold 55,000 boxes of soap powder at $3.75 per box; 28,000 coupons were presented for redemption in 2020. It is estimated that 60% of the coupons will eventually be presented for redemption. Prepare all the entries that would be made relative to sales of soap powder and to the premium plan in 2020.
In 2021, ABC Company issued 5,000 premiums coupons that can be redeemed for prizes. Each coupon if surrendered with 10 can be exchanged with a premium item. The company estimates that 50% of the premiums will be redeemed. ABC purchased 3,000 prizes at a cost of 30 each in anticipation of the premium redemption during the year, 1,000 premiums are redeemed.The entries in the books of ABC Company were: Debit to Premium expenses and credit to Cash at 90,000 (for the purchase of the premium items); Debit to Cash and Credit to Other Income at 10,000 (for the premium redemption). What is the correct amount of estimated liability that should be presented in the statement of financial position at year end?
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 liability for premiums outstanding as of December 31, 2019? 43,200 24,300 15,120 45,200 10,800
Sweet Dates Company offers a premium to its customers—a glass bowl (cost to Sweet Dates is $0.90) upon return of 40 coupons. Two coupons are placed in each box of dates sold. The company estimates, on the basis of past experience, that only 70% of the coupons will ever be redeemed. During 2019, 10 million boxes of dates are sold at $0.30 each. Eight million coupons are redeemed during 2019. Sweet Dates purchased 360,000 glass bowls for the plan on January 1, 2019. Required: 1. Prepare the journal entries related to the sale of dates and the premium plan in 2019. 2. Show how the preceding items would be reported on the December 31, 2019, balance sheet.
Ariana Corporation includes two coupons in each box of cereal box and 9 coupons are needed to be redeemed for the customer to receive a child’s toy dog. In 2020, Ariana Corporation purchased 4,700 toy dogs at $1.05 each. They sold 75,100 boxes of cereal at $4.75 per box, of which the coupons portion is valued at $.25 per box. In total, 31,500 coupons were presented for redemption in 2020. It is estimated that 40% of the coupons will eventually be redeemed. The company uses the Expense approach. Required: Prepare the journal entries required for 2020 using the Expense approach, specifically for the sales of the cereal boxes, the purchase of the toy dogs, the redeemed coupons and the accrual required at year end. Show all calculations. If the company had used the Revenue approach instead, how much revenue from the coupons redeemed would be recorded in 2020?
During 2020, Gray Company sold 500,000 boxes of cake mix under a new sales promotional program. Each box contained one coupon, which entitled the customer to a baking pan upon remittance of P40. The entity paid P50 per pan and P5 for handling and shipping. The entity estimated that 80% of the coupons will be redeemed, even though only 300,000 coupons had been processed during 2020. 2a. What amount should be reported as premium expense for 2020? a. P 2,000,000 b. P 4,500,000 c. P 6,000,000 d. P 7,500,000 2b. What amount should be reported as liability for unredeemed coupons on December 31, 2020? a. 1,000,000 b. 1,500,000 c. 3,000,000 d. 5,000,000