What amount should sweet treats report as its liability

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Reference no: EM133346116

Question: In February 2020, Sweet Treats Company began including one coupon in each package of candy that it sells and offering a toy in exchange for $.50 and 5 coupons. The toys cost Sweet Treats $.80 each. It is estimated that 60% of the coupons will eventually be redeemed. At the end of 2020, Sweet Treats had $18,500 in its Liability for Coupons and 80,000 toys in inventory. During 2021, Sweet Treats sold 1,200,000 packages of candy, and 350,000 coupons were redeemed. In 2021, Sweet Treats purchased 100,000 additional toys. What journal entries would Sweet Treats make during 2021 to reflect these transactions and to make adjustments? (Omit entry to record sales.) In its 12/31/21 balance sheet, what amount should Sweet Treats report as its liability for coupons, inventory of toys, and coupon expense?

Reference no: EM133346116

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