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To increase sales, DD Company inaugurated a promotional campaign on June 30, 2020. DD placed a coupon for a premium in each box of cake sold at P400. A coffee mug costing P60 is offered as premium to customers who send in 5 coupons and a remittance of P20. The distribution cost per premium is P10. DD Company estimated that only 80% of the coupons issued will be redeemed. For the six months ended December 31, 2020, the following data is available in terms of units: Boxes of cake sold 20,000 Premiums purchased 3,000 Coupons redeemed 10,000 What is the estimated liability for premiums on December 31, 2020? a. P180,000 b. P150,000 c. P160,000 d. P60,000

To increase sales, DD Company inaugurated a promotional campaign on June 30, 2020. DD placed a coupon for a premium in each box of cake sold at P400. A coffee mug costing P60 is offered as premium to customers who send in 5 coupons and a remittance of P20. The distribution cost per premium is P10. DD Company estimated that only 80% of the coupons issued will be redeemed. For the six months ended December 31, 2020, the following data is available in terms of units: Boxes of cake sold 20,000 Premiums purchased 3,000 Coupons redeemed 10,000 What is the estimated liability for premiums on December 31, 2020? a. P180,000 b. P150,000 c. P160,000 d. P60,000

Intermediate Accounting: Reporting And Analysis
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
Chapter7: Inventories: Cost Measurement And Flow Assumptions
Section: Chapter Questions
Problem 3MC: During 2019, R Corp., a manufacturer of chocolate candies, contracted to purchase 100,000 pounds of...
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To increase sales, DD Company inaugurated a promotional campaign on June 30, 2020. DD placed a coupon
for a premium in each box of cake sold at P400. A coffee mug costing P60 is offered as premium to customers who send
in 5 coupons and a remittance of P20. The distribution cost per premium is P10. DD Company estimated that only
80% of the coupons issued will be redeemed. For the six months ended December 31, 2020, the following data is
available in terms of units:
Boxes of cake sold 20,000
Premiums purchased 3,000
Coupons redeemed 10,000
What is the estimated liability for premiums on December 31, 2020?
a. P180,000 b. P150,000 c. P160,000 d. P60,000

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