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(Solution Download) Problem 13-9 Sycamore Candy Company offers an MP3 download (seven-single medley) as a premium for ev


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Problem 13-9

 

Sycamore Candy Company offers an MP3 download (seven-single medley)

 

as a premium for every 6 candy bar wrappers presented by customers

 

together with $2.70. 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 $2.45. In addition, it costs 50 cents to

 

distribute each code. The results of the premium plan for the years

 

2014 and 2015 are as follows. (All purchases and sales are for

 

cash.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

 

2015

 

MP3 codes purchased377,500498,300
Candy bars sold2,941,0002,811,200
Wrappers redeemed1,812,0002,265,000
2014 wrappers expected to be redeemed in 2015437,900
2015 wrappers expected to be redeemed in 2016528,500

 

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Prepare the journal entries that should be made in 2014 and

 

2015 to record the transactions related to the premium plan of the

 

Sycamore Candy Company. (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. Round answers to 0

 

decimal places, e.g. 1,525.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Account Titles and Explanation

 

 

Debit

 

 

Credit

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To record the pemium inventory.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To record the sales.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To record the expense associated with the sale.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To record the premium liability.)

 

 

2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To record the pemium inventory.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To record the sales.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To record the expense associated with the sale.)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(To record the premium liability.)

 

 

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Cancel

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2014 and

 

2015.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amount

 

 

Account

 

 

2014

 

 

2015

 

 

Classification

 

Inventory of Premiums$$

 

Property, Plant and EquipmentSelling ExpenseCurrent

 

LiabilityCurrent AssetStockholders' EquityLong-term

 

Investments

Premium Liability

 

Long-term InvestmentsProperty, Plant and EquipmentStockholders'

 

EquityCurrent LiabilitySelling ExpenseCurrent Asset

Premium Expense

 

Current AssetCurrent LiabilityLong-term InvestmentsProperty, Plant

 

and EquipmentSelling ExpenseStockholders' Equity

 

 

 

 


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