Marichu Company manufactures a special product. To promote the sale of the product, a premium is offered to customers who send in three wrappers and a remittance of P25. The distribution cost per premium is P5. 5,000 and 7,000 premiums were purchased in 2021 and 2022 respectively. Data for the premiums are: 2021 2022 Sales P20,000,000 P25,000,000 Premiums purchased P400,000 P560,000 Number of premiums distributed 4,000 5,500 Number of premiums to be distributed next period 300 500 The premium expense for 2022 should be

Marichu Company manufactures a special product. To promote the sale of the product, a premium is offered to customers who send in three wrappers and a remittance of P25. The distribution cost per premium is P5. 5,000 and 7,000 premiums were purchased in 2021 and 2022 respectively. Data for the premiums are: 2021 2022 Sales P20,000,000 P25,000,000 Premiums purchased P400,000 P560,000 Number of premiums distributed 4,000 5,500 Number of premiums to be distributed next period 300 500 The premium expense for 2022 should be

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 19E: Rix Company sells home appliances and provides installation and service for its customers. On April...

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Rix Company sells home appliances and provides installation and service for its customers. On April 1, 2019, a customer purchased a dishwasher that Rix normally sells for 1,000. In addition, the customer purchased the installation service and a 3-year service contract, with stand-alone selling prices of 200 and 400, respectively. Because the customer purchased all three items as a bundle, Rix charged the customer 1,400. Required: 1. How should the transaction price be allocated among the products? 2. Prepare the journal entries to recognize revenue related to each product in 2019.
Cascade Company manufactures a single laundry soap. A towel is offered as a premium to customers who send in two proof-of-purchase seals from the soap boxes and a remittance of P20. The corporation incurs a distribution cost of P5 per towel. Data for the premium offer are: 2021 2022Soap sales P 2,500,000 P 3,125,000Towel purchases (P100 per towel) 175,000 200,000Number of towels distributed as premium 1,000 pieces 1,800 piecesNumber of towels expected to be distributedas premium in the subsequent period 600 pieces 800 pieces 1. What is the balance of the estimated premium liability at December 31, 2022? 2. What is the balance of the premiums inventory as of December 31, 2022?
At the beginning of the current year, Clan Company offers the customers a pottery bowl if they send in three boxtops from the products and P10. The entity estimated that 60% of the boxtops would be redeemed.During the year, the entity sold 675,000 boxes and customers redeemed 330,000 boxtops receiving 110,000 bowls. The cost of each bowl is P 25.What is the liability for outstanding premium at year-end?
Palmer Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 3 boxtops from Palmer Frosted Flakesboxes and P2. The company estimates that 60% of the boxtops will be redeemed. In 2020, the company sold 675,000 boxesof Frosted Flakes and customers redeemed 330,000 boxtops receiving 110,000 bowls. If the bowls cost Palmer Company P6each, how much liability for outstanding premiums should be recorded at the end of 2020?a. P540,000 c. P150,000b. P100,000 d. P276,000
Fry Company offers its customers a pottery cereal bowl if they send in 3 boxtops from Fry boxes and P2. The company estimates that 60% of the boxtops will be redeemed. In 2020, the company sold 675,000 boxesof Fry and customers redeemed 330,000 boxtops receiving 110,000 bowls. If the bowls cost Fry Company P6each, how much liability for outstanding premiums should be recorded at the end of 2020?a. P540,000 c. P150,000b. P100,000 d. P276,000
Lex Company offers its customers a pottery cereal bowl if they send in 3 boxtops from Cute Company boxes and P 1. The company estimates that 60% of the boxtops will be redeemed. In 2020, the company sold 675,000 boxes of Lex Company and customers redeemed for 330,000 boxtops receiving 110,000 bowls. If the bowls cost Lex Company P 3 each, how much liability outstanding premiums should be recorded at the end of 2020? a. P 270,000b. P 50,000c. P 75,000d. P 138,000
Oriole Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 4 boxtops from Oriole Frosted Flakes boxes and $2. The company estimates that 60% of the boxtops will be redeemed. In 2021, the company sold 795000 boxes of Frosted Flakes and customers redeemed 356000 boxtops receiving 89000 bowls. If the bowls cost Oriole Company $4 each, how much liability for outstanding premiums should be recorded at the end of 2021?
During 2020, Gray Company sold 500,000 boxes of cake mix under a new sales promotional program. Each box contained one coupon, which entitled the customer to a baking pan upon remittance of P40. The entity paid P50 per pan and P5 for handling and shipping. The entity estimated that 80% of the coupons will be redeemed, even though only 300,000 coupons had been processed during 2020. 2a. What amount should be reported as premium expense for 2020? a. P 2,000,000 b. P 4,500,000 c. P 6,000,000 d. P 7,500,000 2b. What amount should be reported as liability for unredeemed coupons on December 31, 2020? a. 1,000,000 b. 1,500,000 c. 3,000,000 d. 5,000,000
Beginning the year 2021, the Chicken Wings Manufacturing Company (CWMC) began marketing its iphone XV (pronounced as X Five). Each XV sells for P50,000. To promote and expedite sales of this product, the management of AMC is offering one proof of purchase seal for a special slim transparent case to each customer for every unit of XV purchased. CWMC estimates that out of the units sold during 2021, only 60% of the proof of purchase seals will be redeemed. Sales of XV during 2021 totaled P40 million. For that year, 500 special slim transparent cases were purchased by the company at a total cost of P750,000. These 500 special slim transparent cases have a total sales value of P1,000,000. A total of 256 special slim transparent cases were distributed to customers during the year 2021.How much is the unearned revenue for unredeemed premiums reported in CWMC’s December 31, 2021 statement of financial position?
A towel is offered as a premium to customers who send in 10box tops of facial soap returned and a remittance of ₱25. Distribution cost is ₱10 per towel. The entityestimated that only 60% of the box tops reaching the market will be redeemed. The entity provided thefollowing information: 2020 2021Facial soap sales, ₱50 per unit ₱ 2,500,000 ₱ 2,875,000Towel purchases, ₱90 per unit ₱ 337,500 ₱ 360,000Number of box tops returned 22,500 38,550Requirements:4. Compute for the premiums (as an asset) amount for the year ended:A. December 31, 2020B. December 31, 2021
ABC Company participates in a customer loyalty program operated by YG Corporation where it grants 1 point for every P200 spent on its oil products. Accumulated points by customers from ABC may be used to settle part or in full any merchandise purchased from YG. ABC pays YG P1 for each point redeemed. In 2021, total sales of the ABC amounted to P10,000,000. Only 45% of the 100% expected total points granted were redeemed by the customers from YG Corporation which was used to fully settle the purchase of goods during the year.How much is the expense to be recognized by ABC in 2021?
Sunland Candy Company offers a coffee mug as a premium for every ten $1 candy bar wrappers presented by customers together with $2. The purchase price of each mug to the company is $2.40; in addition it costs $1.60 to mail each mug. The results of the premium plan for the years 2020 and 2021 are as follows (assume all purchases and sales are for cash): 2020 2021 Coffee mugs purchased 750,000 820,000 Candy bars sold 5,600,000 6,760,000 Wrappers redeemed 2,700,000 4,250,000 2020 wrappers expected to be redeemed in 2021 1,900,000 2021 wrappers expected to be redeemed in 2022 2,680,000 Part 1 Partially correct answer icon Your answer is partially correct. Prepare the general journal entries that should be made in 2020 and 2021 related to the above plan by Sunland Candy. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit…

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	2021	2022
Sales	P20,000,000	P25,000,000
Premiums purchased	P400,000	P560,000
Number of premiums distributed	4,000	5,500
Number of premiums to be distributed next period	300	500