On October 1, 2018, Super Soup Corp

question 35

Essay

On October 1, 2018, Super Soup Corp. began offering customers a Super Soup Spoon in return for 20 soup can labels. This offer expires on March 31, 2019. The cost of each soup spoon is $1.50. Based on past experience, the company estimates that only 40% of the labels will be redeemed. During 2018, the company purchased 13,000 soup spoons and sold 600,000 cans of soup at $1.20 per can (the company uses the periodic inventory method). From these sales, 180,000 labels were returned for redemption in 2018.
a. Prepare the journal entry to record the purchase of 12,000 soup spoons.
b. Prepare the journal entry to record the sale of 600,000 cans of soup.
c. Prepare the journal entry to estimate the premium expense for 2018.
d. Prepare the journal entry to record the redemption of 180,000 labels.

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Definitions:

Domestic Price

The price at which goods and services are sold within the internal market of a country.

Elasticities of Supply and Demand

A measure of how much the quantity supplied or demanded of a good responds to a change in price.

Gains From Trade

Gains from trade refer to the net benefits that countries or individuals obtain by selling what they produce and buying what they consume more efficiently through trade.

International Trade

The exchange of goods and services between countries, driven by comparative advantage and resulting in increased economic efficiency.