The Hwang Candy Corporation offers a CD as a premium

#1202

The Hwang Candy Corporation offers a CD as a premium for every five chocolate bar wrappers
that customers send in along with $2.00. The chocolate bars are sold by the company to
distributors for $0.30 each. The purchase price of each CD to the company is $1.80; in addition,
it costs $0.50 to mail each CD. The results of the premium plan for the years 2014 and 2015 are
as follows (all purchases and sales are for cash):

2014 2015

CDs purchased ................................................... 250,000 ................... 330,000

Chocolate bars sold ........................................... 2,895,400 ................. 2,743,600

Wrappers redeemed ........................................... 1,200,000 ................. 1,500,000

2014 wrappers expected to be redeemed in 2015 ........... 290,000

2015 wrappers expected to be redeemed in 2016 ......................................... 350,000

Instructions

(a) Prepare the journal entries that should be made in 2014 and 2015 to record the transactions
related to the Hwang Candy Corporation's premium plan using the expense approach.

(b) Indicate the account names, amounts, and classifications of the items related to the premium
plan that would appear on the statement of financial position and the income statement at the
end of 2014 and 2015.

(c) For each liability that you identified in part (b), indicate whether it is a financial liability.
Explain.

The Hwang Candy Corporation offers a CD as a premium

ANSWER
http://paperinstant.com/downloads/the-hwang-candy-corporation-offers-a-cd-as-a-premium/

1/1
Powered by TCPDF (www.tcpdf.org)