Question 1 Kingbird Golf Stores Inc operates a chain of golf

Question 1 Kingbird Golf Stores, Inc. operates a chain of golf equipment stores in the Western United States. In 2017 the company ran a promotion, providing customers with coupon each time a customer bought a dozen of a specific brand of golf balls. After accumulating five coupons, a customer could present the coupons to the store in exchange for a free golf hat. In 2017, Kingbird purchased 1,400 of the hats for the promotion at $7 each and sold 9,000 dozen golf balls eligible for the promotion at $50 per dozen. Customers presented 4,400 of the coupons for redemption in 2017 Customers have until June 30, 2018 to present coupons in exchange for a free hat. Estimates indicate that a total of 40% of the coupons eventually be presented for redemption. Prepare all the entries that would be made relative to sales of the golf balls included in the promotion and to the golf hat premium plan in 2017. (If no entry is required, select No Entry for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (To record the pemium inventory) (To record the sales) (To record the expense associated with the sale)

Solution

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Account titles and explanation	Debit	Credit
Golf hat inventory	9,800
Cash(1400*7)		9,800
(To record the premium inventory)
Cash(9000*50)	450,000
Sales revenue		450,000
(To record the sales)
Premium Expense(4400*7/5)	6,160
Golf hat inventory		6,160
(To record the expense associated with the sale)
Premium Expense(9500/5)*40%*7	5,320
Premium liability		5,320
(To record the premium liability)