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What formula or steps do I follow to arrive at...

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What formula or steps do I follow to arrive at 18. Fuller Food Company distributes to consumers coupons, which may be presented (on or before a stated expiration date) to grocers for discounts on certain products of Fuller. The grocers are reimbursed when they send the coupons to Fuller. In Fuller?s experience, 50% of such coupons are redeemed, and generally one month elapses between the date a grocer receives a coupon from a consumer and the date Fuller receives it. During 2012, Fuller issued two separate series of coupons as follows. The only journal entries to date recorded debits to coupon expense and credits to cash of $715,000. The December 31, 2012 balance sheet should a include a liability for unredeemed coupons of $60,000. No liability is required for coupons issued on 1/1/12 as it has expired on 6/30/12. For the coupons issued 7/1/12: Total coupon Value = $720,000(50%)=$360,000. Disbursement as of 12/31/12 = $300,000. Liability to be provided in balance sheet as of 12/31/12 = $60,000. Issued, Total Value, Exp. Date, Amt. Disbursed as of 12/31/12 1/1/12, $500,000, 6/30/12, $236,000 7/1/12, $720,000, 12/31/12, $300,000

 

Paper#3582 | Written in 18-Jul-2015

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