Question

Need help with all the incorrect answers (I put wrong answers in Bold) please!! Answer for selling expense 2018 is not $111,000 either.

Problem 13-9 Pearl Company offers an MP3 download (seven-single medley) as a premium for every 5 candy bar wrappers presented by customers together with $2.90. 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 $2.65. In addition, it costs 50 cents to distribute each code. The results of the premium plan for the years 2017 and 2018 are as follows. (All purchases and sales are for cash.) 2017 2018 MP3 codes purchased 300,000 396,000 Candy bars sold 2,803,800 2,967,500 Wrappers redeemed 1,440,000 1,800,000 2017 wrappers expected to be redeemed in 2018 348,000 2018 wrappers expected to be redeemed in 2019 420,000 Your answer is partially correct. Try again. Prepare the journal entries that should be made in 2017 and 2018 to record the transactions related to the premium plan of the Pearl Company. (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 2017 Inventory of Premiums 795000 Cash 795000 (To record the premium inventory.) Cash 841140 Sales Revenue 841140 (To record the sales.) Cash 691200 Premium Expense 72000 Inventory of Premiums 763200 (To record the expense associated with the sale.) Premium Expense 17400 Premium Liability 17400 (To record the premium liability.) 2018 Inventory of Premiums 1049400 Cash 1049400 (To record the premium inventory.) Cash 890250 Sales Revenue 890250 (To record the sales.) Cash 702600 Premium Expense 234000 Premium Liability 17400 Inventory of Premiums 954000 (To record the expense associated with the sale.) Premium Expense 21000 Premium Liability 21000 (To record the premium liability.) Your answer is partially correct. Try again. 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 2017 and 2018. Amount Account 2017 2018 Classification Inventory of Premiums $31800 $95400 Current Asset Premium Liability 17400 21000 Current Liability Premium Expense 89400 255000 is not $111,000 either. Selling Expense

Answer 1

During 2017
Inventory (300,000*2.65)	$795,000
Cash		$795,000
Cash (2,803,800*.30)	$841,140
Sales Revenue		$841,140
Cash ((600,000-(240,000*.50))	$691,200
Premium Expense	$72,000
Inventory of Premiums		$763,200
Computation of premium expense (1440000/5*2.65)	$763,200
Postage (288,000*.50)	$144,000
Total:	$907,200
Less: Cash Received (288,000*2.90)	$835,200
Premium Expense for MPS downloads issued	$72,000
Premium Expense (348,000/5) *(2.65+.50-2.90) = 14,500	$17,400
Premium Liability		$17,400

During 2018
Inventory of Premiums (396,000*2.65)	$1,049,400
Cash		$1,049,400
Cash (2,967,500*.30)	$890,250
Sales Revenue		$890,250
Cash	$864,000
Premium Liability	$17,400
Premium Expense	$72,600
Inventory of Premiums		$954,000
Computation of premium expense (1800000/5*2.65)	$954,000
Postage (360,000*.50)	$180,000
	$1,134,000
Less: Cash Received (1,800,000/5) *2.90	$1,044,000
Premium Expense of Codes issued	$90,000
Less: Outstanding Claims at 12/31/2017 charged to 2017, but redeemed in 2018	$17,400
Premium Expense Chargeable to 2018	$72,600
Premium Expense (420,000/5) *(2.65+.50-2.90)	$21,000
Premium Liability		$21,000

ques 2

	Amount
Account	2017	2018	Classification
Inventory Premiums	$31,800.00	$127,200.00	Current Asset
Premium Liability	$17,400.00	$21,000.00	Current Liability
Premium Expense	$89,400.00	$93,600.00	Selling Expense
795000-763200=31800
17400+72000=89400
31800+1049400-954000=127200
21000+72600=93600