Sun Shack Snack Corp. sells Trail mix for $7.50 a box. By including a coupon for a pedometer, the company hopes to increase sales. If customers redeem four box tops with the coupon, they can obtain a pedometer for $3.00. The pedometers will cost Sun Shack $8.00 each. Sun Shack estimates that the promotion will be popular; 3,000,000 boxes of trail mix will be sold in 2013, and 40% of the coupons will be redeemed during the promotional period. Of the total coupons expected to be redeemed, 70% of the coupons will be redeemed in 2014.
Required:
Prepare journal entries in support of this year's (2013) transactions for the following:
a. Sales (all cash)
b. Purchase of pedometers inventory (for cash)
c. Current year redemptions
d. Liability accrual at end of 2013