Cracker Corporation began a special promotion in July 2018 in an attempt to incr
ID: 2606775 • Letter: C
Question
Cracker Corporation began a special promotion in July 2018 in an attempt to increase sales. A coupon was included in various print advertisements. Customers could send in four coupons to receive $1.45. Cracker's management estimated that 65% of the coupons would be redeemed. For the six months ended December 31, 2018, the following information is available:
Record all necessary journal entries for the coupon offer for 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
1. Record the entry for Coupons distributed.
2. Record the Coupons redeemed.
Coupons distributed 1,000,000 Coupons redeemed 550,000Explanation / Answer
Transaction Account Titles and Explanation Debit Credit 1 Premium expense (1,000,000 x 65% x 1/4 x $1.45) 235625 Premium liability 235625 (To record premium expense accrued on coupons distributed) 2 Premium liability (550,000 x 1/4 x $1.45) 199375 Cash 199375 (To record coupons redeemed)