On January 1, 2017, Sweet Treats Inc. began offering customers a cash rebate of $4.00 if the customer mails in 5 proof-of-purchas labels from its boxes there is one label in each box). Based on historical experience, the company estimates that 30% of the label will be redeemed. During 2017, the company sold 6,000,000 boxes at $2 per box. From these sales, 900,000 labels were redeemed in 2017, 750,000 labels were redeemed in 2018, and the remaining labels were never redeemed.
Required:
1. Prepare the journal entries related to the sale of the Sweet Treats boxes and the cash rebate offer for 2017 and 2018.

Question

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The Answer of On January 1, 2017, Sweet Treats Inc. began offering customers a cash rebate of $4.00 if the customer mails in 5 proof-of-purchas labels from its boxes there is one label in each box). Based on historical experience, the company estimates that 30% of the label will be redeemed. During 2017, the company sold 6,000,000 boxes at $2 per box. From these sales, 900,000 labels were redeemed in 2017, 750,000 labels were redeemed in 2018, and the remaining labels were never redeemed.
Required:
1. Prepare the journal entries related to the sale of the Sweet Treats boxes and the cash rebate offer for 2017 and 2018.