Current Liabilities

question 1

Essay

Current Liabilities.Moon Company includes 1 coupon in each box of soap powder that it packs, 10 coupons being redeemable for a premium consisting of a kitchen utensil. In 2014, Moon Company purchased 36,000 premiums at $1.00 each and sold 540,000 boxes of soap powder @ $4.00 per box. Based on past experience, it is estimated that 60% of the coupons will be redeemed. During 2014, 144,000 coupons were presented for redemption.During 2015, 29,000 premiums were purchased at $1.10. The company sold 1,200,000 boxes of soap at $4.00 and 495,000 coupons were presented for redemption.
InstructionsPrepare all the entries that would be made relative to sales of soap powder and to the premium plan in both 2014 and 2015. Assume a FIFO inventory flow.

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Definitions:

Article 8

Typically references the right to respect for private and family life, home and correspondence under the European Convention on Human Rights.

Debenture

A type of long-term debt instrument that is not secured by physical assets or collateral.

Unsecured Creditor

A creditor who has extended credit without securing collateral and thus stands at a higher risk in case of the debtor's bankruptcy.

Secured Bond

A type of bond backed by collateral, providing the bondholder with a claim on specific assets if the issuer defaults.