Prepare the general journal entries

Assignment Help Accounting Basics

Reference no: EM131811728

Sweets Candy Company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $2.40; in addition it costs $1.60 to mail each mug. The results of the premium plan for the years 2017 and 2018 are as follows (assume all purchases and sales are for cash):

	2017	2018
Coffee mugs purchased	720,000	800,000
Candy bars sold	5,600,000	6,750,000
Wrappers redeemed	2,800,000	4,200,000
2017 wrappers expected to be redeemed in 2018	2,000,000
2018 wrappers expected to be redeemed in 2019		2,700,000

Instructions:

(a) Prepare the general journal entries that should be made in 2017 and 2018 related to the above plan by Sweets Candy.

(b) Indicate the account names, amounts, and classifications of the items related to the premium plan that would appear on the Sweets Candy Company balance sheet and income statement at the end of 2017 and 2018.

Reference no: EM131811728

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