ADJUSTING ENTRIES FOR REFUND COUPONS
Cal-Lite Products, Inc., manufactures a line of food products that appeals to persons interested in weight loss. To stimulate sales, Cal-Lite includes cash refund coupons in many of its products. Cal-Lite issues the purchaser a check when the coupon is returned to the company, which may be many months after the product is sold to stores and distributors. In addition, a significant number of coupons issued to customers are never returned. As cash distributions are made to customers, they are recorded in an expense account.
ADJUSTING ENTRIES FOR REFUND COUPONS