Steps for

Current Attempt in Progress

Marigold van Leeuwen operates a very busy roadside fruit and vegetable stand from May to October every year as part of his farming operation, which has a December $31$ year end and uses ASPE. Each time a customer purchases over $$10$ of produce, Marigold gives the customer a special fruit$-$shaped sticker that can't be copied. If a customer collects $10$ of these stickers, they can have $$10$ worth of produce at no charge. The stickers must be redeemed by June $30$ of the following year. During the current year, $24,500$ stickers were given out to customers. Marigold knows from experience that some stickers will never be cashed in$,$ because the customer may not shop at his stand frequently enough to collect $10$ stickers, or they get lost or forgotten. In previous years, $10\%$ of stickers have been redeemed. During the current year, $5\%$ of the stickers given out were redeemed. Marigold uses the expense approach to account for premiums and estimates that product costs are $60\%$ of their selling prices.

$($a$)$

Your answer is partially correct.

Determine the amount that should be reported as premium expense on the December $31$ income statement and the amount of any liability at$.$December $31.$

Premium expense

Estimated liability for premiums

$

$

eTextbook and Media