Problemto stimulate the sales of its royal frozen dinners, Ask an Expert

Accounting

Problem

To stimulate the sales of its Royal Frozen dinners, King Company places 1 coupon in each box. Ten coupons are redeemable for a premium consisting of a hot meal carrier. In 2015, the company purchases 100,000 hot meal carriers at $2.25 each and sells 2, 200,000 boxes of Royal Frozen dinners at $4.75 a dinner.

From its experience with other similar premium of the company estimates that 30% of the coupons issued will be mailed back for redemption. During 2015, 230,000 coupons are presented for redemption.

Instructions

Prepare the journal entries that should be recorded in 2015 relative to the premium plan.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92798538

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