Miracle Company manufactures a product that is packaged and sold. Each sale is accompanied by 3 coupons to be able to purchase a plate. A plate is offered to customers sending two coupons accompanied by a remittance of P2. 2018 2019 Sale @ 250 Purchase of premium, P10 per plate Number of plates distributed as premiums Premiums distributed Distribution cost P5 per plate QUESTIONS: 1) What is the premium expense for 2018? 2) How much is the premium liability as of December 31, 2019? 4,200,0003,600,000 580,000 390,000 80% 70% 17,000 13,000

Miracle Company manufactures a product that is packaged and sold. Each sale is accompanied by 3 coupons to be able to purchase a plate. A plate is offered to customers sending two coupons accompanied by a remittance of P2. 2018 2019 Sale @ 250 Purchase of premium, P10 per plate Number of plates distributed as premiums Premiums distributed Distribution cost P5 per plate QUESTIONS: 1) What is the premium expense for 2018? 2) How much is the premium liability as of December 31, 2019? 4,200,0003,600,000 580,000 390,000 80% 70% 17,000 13,000

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

Chapter9: Current Liabilities And Contingent Obligations

Section: Chapter Questions

Problem 19E

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Use the information for the next four (4) questions. BCD Company included one coupon in each box of cereal sold. A bowl was offered as a premium to customers who send in 15 coupons and a remittance of P15. Distribution cost of premium is P7.5. Experience indicated that only 30% of the coupons will be redeemed. 2020 2021 Boxes of cereal sold 3,000,000 3,750,000 Number of bowls purchased at P75 each 75,000 120,000 Coupons redeemed 600,000 1,050,000 A.) What is the premium expense for 2020? B.) What is the premium liability on December 31, 2020? C.) What is the premium expense for 2021? D.) What is the premium liability on December 31, 2021?
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