Sweet Dates Company offers a premium to its customers - a glass bowl (cost to Sweet Dates is $0.90) upon return of 40 coupons. Two coupons are placed in each box of dates sold. The company estimates, on the basis of past experience, that only 70% of the coupons will ever be redeemed. During 2016, 10 million boxes of dates are sold, for cash, at $0.30 each. Eight million coupons are redeemed during 2016. Sweet Dates purchased 360,000 glass bowls for the plan on January 1, 2016.
Required:
1. Prepare the journal entries related to the sale of dates and the premium plan in 2016.
2. Show how the preceding items would be reported on the December 31, 2016, balance sheet.
