A retail store gives its customers coupons redeemable for a poster plus a music CD. Data related to 2015 and 2016 is as follows:
- One coupon is issued for each dollar of sales.
- On the surrender of 100 coupons and the receipt of $5.00 cash from a customer, the poster and CD are given to the customer.
- It is estimated that 80% of the coupons will be presented for redemption.
- Sales for 2015 were $700,000, and the coupons redeemed totaled 420,000.
- Sales for 2016 were $840,000, and the coupons redeemed totaled 750,000.
- During 2015, the store purchased, on credit, 20,000 posters at $2.00 per poster and 20,000 CDs at $6.00 per CD.
Using the attached T-account template, prepare the 2015 and 2016 entries to recognize:
a. Sales during 2015 (assume that all sales are for cash)
b. The purchase of posters and CDs during 2015
c. The receipt of cash with the coupons redeemed during 2015
d. The estimated liability at 12/31/15
e. Sales during 2016 (assume that all sales are for cash)
f. The receipt of cash with the coupons redeemed during 2016
g. The estimated liability at 12/31/16
Assume that all the coupons expected to be redeemed from 2015 were redeemed by the end of 2016.
Property, Plant &