Nutra Co. includes one coupon in each bag of dog food it sells. In return for 12 coupons, customers receive a dog toy that the company purchases for $3.00 each. Nutra s experience indicates that 70%

Nutra Co. includes one coupon in each bag of dog food it sells. In return for 12 coupons, customers receive a dog toy

that the company purchases for $3.00 each. Nutra’s experience indicates that 70% of the coupons will be redeemed.

During 2014, 140,000 bags of dog food were sold, 18,000 toys were purchased, and 72,000 coupons were redeemed.

During 2015, 150,000 bags of dog food were sold, 14,000 toys were purchased, and 66,000 coupons were redeemed.

Required: What accounts and dollar amounts would be reported on the Income Statement (not “Sales”) and Balance

Sheet (not “Cash”) for both 2014 & 2015?

Account Name 2014 ($) 2015 ($)

Income Statement: _______________________ ____________ ___________

Balance Sheet (Asset): _______________________ ____________ ___________

Balance Sheet (Liability): _______________________ ____________ ___________

2. (1 point)

Fret Corp. sells a machine for $6,700 under a 24 month warranty agreement that requires the company to provide all

repairs at no cost to the customers. With sales being made evenly throughout the year, the company sells 360

machines in 2014. Warranty costs are expected to be paid 40% in 2014 and 60% in in 2015. As a result of product

testing, the company estimates that the warranty cost is $400 per machine.

Required: Assuming the actual warranty costs are incurred exactly as estimated, what accounts and dollar amounts

would be reported on Fret’s 2014 Income Statement (not “Sales”) and Balance Sheet (i.e., the current liability) under

the accrual method?

Account Name 2014 ($)

Income Statement: _______________________ ____________

Balance Sheet: _______________________ ____________ 

 

 

 

 

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Chapter 13:
Extra Credit Homework Opportunity (Spring ’14)
Name (Print): ___________________________
1. (1 point)
Nutra Co. includes one coupon in each bag of dog food it sells.
In return for 12 coupons, customers receive a dog toy
that the company purchases for $3.00 each.
Nutra’s experience indicates that 70% of the coupons will be redeemed.
During 2014, 140,000 bags of dog food were sold, 18,000 toys were purchased, and 72,000 coupons were redeemed.
During 2015, 150,000 bags of dog food were sold, 14,000 toys were purchased, and 66,000 coupons were redeemed.
Required:
What accounts and dollar amounts would be reported on the Income Statement (not “Sales”) and Balance
Sheet (not “Cash”) for both 2014 & 2015?
Account Name
2014 ($)
2015 ($)
Income Statement:
_______________________
____________
___________
Balance Sheet (Asset):
_______________________
____________
___________
Balance Sheet (Liability):
_______________________
____________
___________
2. (1 point)
Fret Corp. sells a machine for $6,700 under a 24 month warranty agreement that requires the company to provide all
repairs at no cost to the customers.
With sales being made evenly throughout the year, the company sells 360
machines in 2014.
Warranty costs are expected to be paid 40% in 2014 and 60% in in 2015.
As a result of product
testing, the company estimates that the warranty cost is $400 per machine.
Required:
Assuming the actual warranty costs are incurred exactly as estimated, what accounts and dollar amounts
would be reported on Fret’s 2014 Income Statement (not “Sales”) and Balance Sheet (i.e., the current liability) under
the accrual method?
Account Name
2014 ($)
Income Statement:
_______________________
____________
Balance Sheet:
_______________________
____________
NOTE:
Remember to staple the paper(s) on which you did the work to this sheet.
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By signing below, I certify that while I may have legitimately worked with another student, I did not simply copy another
student’s work or allow another student to simply copy my work.
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