Question

Sheffield offers an MP3 download (seven-single medley) as a premium for every 6 candy bar wrappers presented by customers together with $2.60. 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 $2.35. 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. 270,000 356,400

Candy bars sold 2,993,500 2,832,900

Wrappers redeemed 1,296,000 1,620,000

2020 wrappers expected to be redeemed in 2021 313,200

2021 wrappers expected to be redeemed in 2019 378,000

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.

account	2020	2021	classification
inventory of premiums
premium liability
premium expense

Answer 1

2020 :- -The Porumium imventory:- classification! Panticalors Caedit Debit 2, 400,000XQ.35 = 634500 Inventory of Poumiumd $6,34 500 0 $634,500 00 Cash The Sale : Coredit classification Panticulorş cash Debit = २११३50 x03 48,88,050 = 8,98,050 $8,98,050. Şales Revenue The x penవe వవంCred whtk వయం classificadion - (1296 000l6)x (26 E4153,600-O•5) -(129600ol6)x(2-35 +0i5-2.6) Debit Conedit Panticulos $453,600 Poromium Expenge $54 1000 intertary of Paemiumd The Poremium liability Cash $5,04,600 clallification |(3132015.a6) Panticalon Pebit Coedit Baremium Epene 4 13,050 Parumium liability 23510.5-2 $13,0 50,

Pageno 2021 The Pou mium imventory:- clakifiration Coudit Paorticular& Deblt 356400 X 2:3S Anwentry of Poumiund 48,34,540. = 8,34,540 $8,84,540 Cash the sales classification Coredit. Debit Poorticulard 2832900 K0.3 Cash = 8,49,840 3६,५१,४4० Saleş Ravenue The Expende as So ciated With faleş. Coudit Clallifiatijpn Panticalor& Debit 1on C16200000/6) x(2•6-o$) cash Poumium liabilitg13,050 Poumium Expensel 454,450. Enveriony of Paumiums The paumium liabi ity: $5,67,000 (1620000/6) x(2-35+ eis-2:6) $6.34500 clallification Caudit. Debit Pariiculard (349006 fe)x (a 3s 40-5-2:6) Promium Expenk 15,450 Porumium liabili $15, 40

Pagevo@ classification account 20 21 2020 Liaventory.sBaumiumf $6.34,500.12.31.S0 Poremium liability$13,050. Poumium Expensel S4,000 50