Reference no: EM132728745

Pop Company sells banana juice. In order to promote the drink among teenagers and others who might otherwise be indifferent to the product, the entity inaugurated in the current year a premium plan called "Drink N Win". For every 10 bottle caps and 5 pesos, the customers receive an attractive ballpen and become eligible for a grand prize of 5,000 in cash which is awarded for every 100 tops turned in. The entity estimated that only 25% of bottle caps shall be presented for redemption. During the current year, entity sold 400,000 bottles of banana juice at 9 pesos each. Purchased 10,000 ballpens for a total cost of 900,000 and incurred non-deferrable cost of 30,000 applicable to the premium plan. A total of 8,000 ballpens have been redeemed.

Requirement:

Problem 1: Prepare journal entries to record the transactions relating to premium plan for the current year.