Moleski Limited, a private company following ASPE, includes one coupon in each box of soap powder that

Question:

Moleski Limited, a private company following ASPE, includes one coupon in each box of soap powder that it produces, and 10 coupons are redeemable for a premium (a kitchen utensil). In 2017, Moleski purchased 8,800 premiums at $0.90 each and sold 120,000 boxes of soap powder at $3.30 per box. In total, 44,000 coupons were presented for redemption in 2017. It is estimated that 60% of the coupons will eventually be presented for redemption. Moleski uses the expense approach to account for premiums.

Instructions

(a) Prepare all the entries that would be made for sales of soap powder and for the premium plan in 2017.

(b) What amounts relative to soap powder sales and premiums would be shown on Moleski's financial statements for 2017?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Coupon
A 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...