On January 1, 2017, Fro-Yo Inc. began offering customers a cashrebate of $5.00 if the customer mails in 10 proof-of-purchaselabels from its frozen yogurt containers. Based on historicalexperience, the company estimates that 20% of the labels will beredeemed. During 2017, the company sold 5,000,000 frozen yogurtcontainers at $1, cash, per container. From these sales, 800,000labels were redeemed in 2017, 150,000 labels were redeemed in 2018,and the remaining labels were never redeemed.
Required:
| 1. | Prepare the journal entries related to the sale of frozenyogurt and the cash rebate offer for 2017 and 2018. |
| 2. | Next Level Assume that 300,000 labels were redeemed in 2018.Prepare the journal entries related to the cash rebate offer for2018. |
On December 1, 2016, Insto Photo Company purchased merchandise,invoice price $23,000, and issued a 6%, 120-day note to RingoChemicals Company. Insto uses the calendar year as its fiscal yearand uses the perpetual inventory system.
| |
| Prepare journal entries on Insto’s books to record thepreceding information, including the adjusting entry at the end ofthe year and payment of the note at maturity. |
