In: Accounting
On january 1, 2017 , Fro-yo Inc. began offering
customers a cash rebate of $5 if the customer mails in 10 proof-of
purchase labels from its frozen yogurt containers. Based on
historical experience , the company estimates that 20% of the
labels will be redeemed .During 2017, the company sold 5000000
frozen yogurt containers at $1 cash, per container .From these
sales,800000 labels were redeemed in2017,150000 labels were
redeemed in 2018, and the remaining labels were redeemed.
Required
:
1.Prepare the journal entries related to the sale of frozen yogurt
and the cash rebate offer for 2017 and 2018.
2. Next level Assume that 300000 labels were redeemed in 2018.
Prepare the journal entries related to the cash rebate offer for
2018.