Excellence, Inc., places a coupon in each box of its product. Customers may send in ten coupons and $2.50, and the company will send them a CD. Sufficient CDs were purchased at $6 apiece. A certain number of boxes of product were sold in 2014. It was estimated that a total of 5% of the coupons will be redeemed. In 2014, 18,000 coupons were redeemed. Mailing costs were $0.75 per CD. At December 31, 2014, the following adjusting entry was made to record the estimated liability for premium outstanding:
Required:
Compute the number of boxes of product sold by Excellence in 2014.

Question

Excellence, Inc., places a coupon in each box of its product. Customers may send in ten coupons and $2.50, and the company will send them a CD. Sufficient CDs were purchased at $6 apiece. A certain number of boxes of product were sold in 2014. It was estimated that a total of 5% of the coupons will be redeemed. In 2014, 18,000 coupons were redeemed. Mailing costs were $0.75 per CD. At December 31, 2014, the following adjusting entry was made to record the estimated liability for premium outstanding:  
Required:
Compute the number of boxes of product sold by Excellence in 2014.

Quizplus · Accepted Answer

The Answer of Excellence, Inc., places a coupon in each box of its product. Customers may send in ten coupons and $2.50, and the company will send them a CD. Sufficient CDs were purchased at $6 apiece. A certain number of boxes of product were sold in 2014. It was estimated that a total of 5% of the coupons will be redeemed. In 2014, 18,000 coupons were redeemed. Mailing costs were $0.75 per CD. At December 31, 2014, the following adjusting entry was made to record the estimated liability for premium outstanding:  
Required:
Compute the number of boxes of product sold by Excellence in 2014.