Question

Marin 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, Marin purchased 1,300 of the hats for the promotion at $9 each and sold 10,500 dozen golf balls eligible for the promotion at $50 per dozen. Customers presented 2,000 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 50% of the coupons will 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

Answer 1

Answer:

Golf hat inventory (Dr.) $11,700

Purchase (Cr.) $11,700

Cash (Dr.) $525,000

Sales (Cr.) $ 525,000

Redemption of coupons

10500  / 5 = 2,100

50% customers redeem the coupon then

2100 hats * 50% = 1,050 hats.

Explanation:

Marin golf has purchased hats at a price of $9 per hat. This transaction is recorded in the journal entries. The company has also introduced a promotion in which customers can redeem coupon and get a free golf hat in exchange of 5 coupons.