Question

CAN ANYONE HELP ME WITH THIS?

Your answer is partially correct. Kingbird Corp. offers its customers a 5-piece knife set in exchange for $11 and the purchase of its CC Cookware set. The company purchased 2,930 units of the 5-piece knife sets at $15 each. It estimates that 70% of customers will participate in the promotion and that 5% of the amount received from customers relates to the awarded premiums. In 2021, the company sold 3,680 cookware sets at a sales price of $113 resulting in sales revenue of $415,840. By the end of the year, 2,460 customers took advantage of the promotion. Prepare the appropriate journal entries assuming Kingbird follows ASPE and uses the expense approach. 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 for the amounts.) Account Titles and Explanation Debit Credit Inventory of Premiums 43,950 Cash 43,950 (To record purchase of premiums) Cash 415,840 415,840 Sales Revenue (To record cash sales) Cash 14,544 Premium Expense 36,900 Inventory of Premiums (To record redemption for premiums) Premium Expense 13,108 13.108 Estimated Liability for Premiums (To record premium expense)

Answer 1

Hi

Let me know in case you face any issue:

Answer are highlighted in yellow: Solution: Credit Journal entries Account title and explaination Debit Cash (2460*11) $ 27,060 Premium Expense (plug) $ 9,840 Inventory of Premium (2460*15) (To record redemption for premiums) Premium Expense [(3680*70%)*(15-11)] - (9840) $ 464 Estimated Liability for premiums (To record premium expense) $36,900 $ 464