Question

On January 1, 2017, Fro-Yo Inc. began offering customers a cash rebate of $5.00 if the customer mails in 10 proof-of-purchase labels from its frozen yogurt containers. Based on historical experience, the company estimates that 20% of the labels will be redeemed. During 2017, the company sold 5,000,000 frozen yogurt containers at $1, cash, per container. From these sales, 800,000 labels were redeemed in 2017, 150,000 labels were redeemed in 2018, and the remaining labels were never redeemed.

Required:

1.	Prepare the journal entries related to the sale of frozen yogurt and the cash rebate offer for 2017 and 2018.
2.	Next Level Assume that 300,000 labels were redeemed in 2018. Prepare the journal entries related to the cash rebate offer for 2018.

EQUITY

311Common Stock

331Retained Earnings

ASSETS REVENUE 111 Cash 121 Accounts Receivable 141 Inventory 152 Prepaid Insurance 181 Equipment 189 Accumulated Depreciation 411 Sales Revenue EXPENSES 500 Cost of Goods Sold 511 Insurance Expense 512 Utilities Expense 521 Salaries Expense 532 Bad Debt Expense 540 Interest Expense 541 Depreciation Expense 559 Miscellaneous Expenses 910 Income Tax Expense LIABILITIES 211 Accounts Payable 231 Salaries Payable 242 Estimated Rebate Liability 250 Unearned Revenue 261 Income Taxes Payable GENERAL JOURNAL Score: 56/113 DATE ACCOUNT TITLE POST. REF DEBIT CREDIT 400,000.00 00,000.00 Cash 75,000.00 Cash 75,000.00 Cash Assume that 300,000 labels were redeemed in 2018. Prepare the journal entries related to the cash rebate offer for 2018. How does grading work? PAGE 9 GENERAL JOURNAL Score: 17/37 DATE ACCOUNT TITLE POST. REF DEBIT CREDIT 0,000.00 Cash

Answer 1

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