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Prepare entries that be made relative to sales of soap

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Question - Moon Company includes 1 coupon in each box of soap powder that it packs, 10 coupons being redeemable for a premium consisting of a kitchen utensil. In 2017, Moon Company purchased 48,000 premiums at $1.00 each and sold 720,000 boxes of soap powder @ $4.00 per box. Based on past experience, it is estimated that 60% of the coupons will be redeemed. During 2017, 192,000 coupons were presented for redemption.

During 2018, 39,000 premiums were purchased at $1.10. The company sold 1,600,000 boxes of soap at $4.00 and 660,000 coupons were presented for redemption.

Required - Prepare journal entries that would be made relative to sales of soap powder and to the premium plan in both 2017 and 2018. Assume a FIFO inventory flow.

Reference no: EM132571704

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