Irwin Music Shop gives its customers coupons redeemable for a poster plus a Bo Diddley CD. One
Question:
Irwin Music Shop gives its customers coupons redeemable for a poster plus a Bo Diddley CD. One coupon is issued for each dollar of sales. On the surrender of 100 coupons and $5.00 cash, the poster and CD are given to the customer. It is estimated that 80% of the coupons will be presented for redemption. Sales for the first period were $690,000, and the coupons redeemed totaled 414,000. Sales for the second period were $832,000, and the coupons redeemed totaled 722,200. Irwin Music Shop bought 20,000 posters at $2/poster and 20,000 CDs at $6/CD.
Prepare the following entries for the two periods, assuming all the coupons expected to be redeemed from the first period were redeemed by the end of the second period.
a. To record coupons redeemed. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Period 1
Account Titles and Explanation Debit Credit
Period 2
Account Titles and Explanation Debit Credit
SHOW LIST OF ACCOUNTS
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b. To record estimated liability. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Period 1
Account Titles and Explanation Debit Credit
Period 2
Account Titles and Explanation Debit Credit
CouponA coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
Step by Step Answer:
a First calculate the Amount of Cash received Coupons redeemed 414000 For every 100 Coupons 5 is rec...View the full answer
Intermediate Accounting
ISBN: 978-0470161012
9th Canadian Edition, Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield.
