Cracker Corporation began a special promotion in July 2018 i

Cracker Corporation began a special promotion in July 2018 in an attempt to increase sales. A coupon was included in various print advertisements. Customers could send in four coupons to receive $1.45. Cracker\'s management estimated that 65% of the coupons would be redeemed. For the six months ended December 31, 2018, the following information is available:

Record all necessary journal entries for the coupon offer for 2018. (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field.)

1. Record the entry for Coupons distributed.

2. Record the Coupons redeemed.

Coupons distributed	1,000,000
Coupons redeemed	550,000

Solution

Transaction Account Titles and Explanation Debit Credit 1 Premium expense (1,000,000 x 65% x 1/4 x $1.45) 235625 Premium liability 235625 (To record premium expense accrued on coupons distributed) 2 Premium liability (550,000 x 1/4 x $1.45) 199375 Cash 199375 (To record coupons redeemed)