Brief Exercise 1315 Marigold Company offers a set of buildin

Brief Exercise 13-15 Marigold Company offers a set of building blocks to customers who send in 3 UPC codes from Marigold cereal, along with 504. The block sets cost Marigold $1.00 each to purchase and 60c each to mail to customers. During 2017, Mangold sold 960,000 boxes of cereal. The company expects 30% of the UPC codes to be sent in. During 2017, 96,000 UPC codes were redeemed. Prepare Mangold\'s December 31, 2017, adjusting entry. (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 Click if you would like to Show Work for this question: Open Show Work

Solution

Note:- UPC codes expected to be sent in [960000 *0.3 during 2017] = 288000

less: UPC codes redeemed during 2017 = 96000

Estimated redemptions =192000

Outstanding claims per UPC codes cost [192000/3 * ($1 + $0.6 - $0.5)] = $70400

Event	Accounts titile	Dr	Cr
1	Premium expense	$70400
	To Liability for Premium		$70400