Question

Question 8 Concord Limited, a private company following ASPE, includes one coupon in each box of soap powder that it produces, and 8 coupons are redeemable for a premium (a kitchen utensil). In 2020, Concord Corporation purchased 8,810 premiums at $0.80 each and sold 97,600 boxes of soap powder at $2.80 per box. In total, 32,000 coupons were presented for redemption in 2020. It is estimated that 60% of the coupons will eventually be presented for redemption. Concord uses the expense approach to account for premiums. v (a) Your answer is correct. Prepare all the entries that would be made for sales of soap powder and for the premium plan in 2020. Ignore any cost of goods sold entry. (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 and enter o for the amounts.) Account Titles and Explanation Debit Credit TInventory of Premiums Cash 7048 (To record cash purchase of premiums) Cash 273280 Sales Revenue (To record cash sales) Premium Expense 32002 3200 Inventory of Premiums (To record redemption of coupons) TPremium Expense 2656 L T Estimated Liability for F U L2656
what is the answer for part b?

THanks

Answer 1

Concord Limited Balance Sheet: Current Assets: Inventory of Premiums 3848 Current Liabilities: Estimated Liability for Premiums 2656 ($7,048 - $3,200) = $3,848 Income Statement: Sales Less: Premium Expense ($3,848 + $2,656) 273280 6504 266776