An entity includes one coupon in each box of laundry soap it sells. A towel is offered as premium to customers who send in 10 coupons and a remittance of P10. Distribution cost of premium is P5. Experience indicates that only 30% of the coupons will be redeemed. 2021 Boxes of soap sold - 2,000,000.00 Number of towels purchased at P50 each - 50,000 Coupons redeemed - 400,000 2022 Boxes of soap sold - 2,500,000.00 Number of towels purchased at P50 each - 80,000 Coupons redeemed - 700,000 What is the amount of Premium Expense for 2021? What is the premium expense for 2022? What is the premium liability on December 31, 2022?
An entity includes one coupon in each box of laundry soap it sells. A towel is offered as premium to customers who send in 10 coupons and a remittance of P10. Distribution cost of premium is P5. Experience indicates that only 30% of the coupons will be redeemed. 2021 Boxes of soap sold - 2,000,000.00 Number of towels purchased at P50 each - 50,000 Coupons redeemed - 400,000 2022 Boxes of soap sold - 2,500,000.00 Number of towels purchased at P50 each - 80,000 Coupons redeemed - 700,000 What is the amount of Premium Expense for 2021? What is the premium expense for 2022? What is the premium liability on December 31, 2022?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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An entity includes one coupon in each box of laundry soap it sells. A towel is offered as premium to customers who send in 10 coupons and a remittance of P10. Distribution cost of premium is P5. Experience indicates that only 30% of the coupons will be redeemed.
2021
Boxes of soap sold - 2,000,000.00
Number of towels purchased at P50 each - 50,000
Coupons redeemed - 400,000
2022
Boxes of soap sold - 2,500,000.00
Number of towels purchased at P50 each - 80,000
Coupons redeemed - 700,000
What is the amount of Premium Expense for 2021?
What is the premium expense for 2022?
What is the premium liability on December 31, 2022?
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