Question

Question 5 Shamrock offers an MP3 download (seven-single medley) as a premium for every 6 candy bar wrappers presented by customers together with $2.65. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each download code to the company is $2.40. In addition, it costs 50 cents to distribute each code. The results of the premium plan for the years 2020 and 2021 are as follows. (All purchases and sales are for cash.) 2020 2021 MP3 codes purchased 375,000 495,000 Candy bars sold 2,659,900 2,812,000 Wrappers redeemed 1,800,000 2,250,000 2020 wrappers expected to be redeemed in 2021 435,000 2021 wrappers expected to be redeemed in 2019 525,000

Prepare the journal entries that should be made in 2020 and 2021 to record the transactions related to the premium plan of the Shamrock. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 1,525.) Account Titles and Explanation Debit Credit 2020 (To record the premium inventory.) (To record the sales.) (To record the expense associated with the sale.) (To record the premium liability.) 2021 (To record the premium inventory.) (To record the sales.) (To record the expense associated with the sale.) (To record the premium liability.) SHOW LIST OF ACCOUNTS

Indicate the amounts for each accounts, and classifications of the items related to the premium plan that would appear on the balance sheet and the income statement at the end of 2020 and 2021. Amount Account 2020 2021 Classification Inventory of Premiums $ $ Current LiabilityLong-term InvestmentsSelling ExpenseStockholders' EquityProperty, Plant and EquipmentCurrent Asset Premium Liability Current AssetSelling ExpenseProperty, Plant and EquipmentCurrent LiabilityLong-term InvestmentsStockholders' Equity Premium Expense

Answer 1

Working Notes j. Computation of pemim Liability 9. Wrappers Redeemed 6. MP3 Codes Redeemed 19/6) F1 с. | РеМm Expease (6Х2.4 ) d. Distribution Costs (6 x 0.50) f. Total Grots Premium Expenses (ct) g. Gsh Received (6 * 2.65) hy Premium Expenses (f-g) 435000 72500 174000 36250 210250 192125 S25000 87500 210600 43750 253750 23/875 21875 18125

2. Computation of Premum Expelje 2020 2021 1 9 Wrappers Redeemed 16. MP3 Codes Redeemed (76) c. Promlum Expense (682.40) d. Distribution Costs C6 x 0.50) 18.00000. 300000 720000 1G000 22.50000 375000 9ooooo 487500 e. f. 870000 795ood 1887500 993750 Total Gross Premium Expense Cathy Gsh Received (682.65) Premium Lighlity Premium Expenses le-f- g) 18125 75625 hi 75000 645000 806250 Li. Net Cash Received if-1)

Ancora In the books of Shamrock . Journal Entrier for 2020 on 900000 9000 Invenbory Alc ( 375000 units X2-4) - To Cash Alon e cto record the premium inventory) Cash Ale (2659,900 units x 0.30 cents) on O To sales w e (To record the sales) I 797970 797970 on 645000 75000 Cash Ale (795000 - 159000) Premium Expenie Alc- To Inventory Alc o ( To record the expense associated with sgles 1: 720000 On 18125 Premium Expense Ale - To Remium« Liability (Tonecold the premium ligh 18125 2436095 I 246095

In the books of Shamrock Journal Enwies for 2017 - pr en 1 1188000 Inventory Al (495000 49/15 X 2.40 - To Cash A/C Co To record the premium inventory) 1188000 0.30 a 843600 Cash Ale (2812000 units X To sales Alc (Being to record the sales) 84360 0 806250 18125 73625 Gsh Al (993750 - 187500) Premium Liability Alc Premium Expense Alc pr. To Inventory (To record the premium expense assougled. with sales] 900000 - or 2,875 - Premium Expense Ale To Remium Liability Ale 21875 محرومعم لعه (تاراور 2953,475 2953475

1 Indication of amount of each accounts and classificat that would appear on Balance sheet 6 Income statement Classification Account Amount 2012 2011 Inventory 180000 288000 of Remium (900000 - (1188060 - 720000 900000) o wxxent Asset Premium 18125 21875 Current liability an Premium Expense Selling Expenses 93125 (75000 t 1 18125 97500 (75625 + 1 21875