Assume That Wallywill, Inc

Essay

Assume that Wallywill, Inc. offered its customers, which are primarily retail stores who sell its products, an advertising allowance equal to 8% of the amount of purchases from Wallywill during December, if the retail store would spend the money for advertising in January. Wallywill Inc.'s sales in December totaled $5,000,000, and it was expected that 70% of those sales were made to retailers who would take advantage of the advertising allowance offer. Write the journal entry or use the horizontal model to show the effect of the accrual that should be made as of December 31 with respect to the advertising allowance offer.