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Shediac Bay Marina had a customer loyalty program at its gas dock. For every litre of gasoline purchased, the company would get a redemption award of…

Shediac Bay Marina had a customer loyalty program at its gas dock. For every litre of gasoline purchased, the company would get a redemption award of $.015 which can be used to purchase products in the company’s retail marine store. In July, the company sold 100,500 litres of gasoline. 47. The entry to record the initial liability when the promotion began requires a $______ credit to ________. A) $1,507.50; Redemption Reward Liability C) $1507.50 Cash B) $1,507.50; Sales Discounts D) $3,015; Cash 48. By the end of the August , customers redeemed 25,000 of the rewards. Shediac should make which of the following entries to record the redemption? A) Cash 375 Redemption Reward Liability 375 B) Redemption Reward Liability 375 Cash 375 C) Cash 375 Redemption Expense 375 D) Redemption Expense 375 Cash 375 Use the following to answer questions 49-50: Kim Company sells 2,000 units of its product for $500 each in 2011. The selling price includes a one-year warranty on parts. It is expected that 3% of the units will be defective and that repair costs will average $100 per unit. In 2011, warranty contracts are honoured on 40 units for a total cost of $4,000. 49. What amount should Kim Company accrue on December 31, 2011 for estimated warranty expense? A) $6,000. B) $4,000. C) $2,000. D) $30,000. 50. What amount will be reported on Kim Company’s balance sheet as Estimated Warranty Liability on December 31, 2011? A) $4,000. B) $6,000. C) $2,000. D) cannot be determined

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