What is the premium expense?A. 1,836,000B. 840,000C. 756,000D. 2,189,500 Items 3 to 7 are based on the following information.JACKSON Music Emporium carries a wide variety of musical instruments,sound reproduction equipment, recorded music, and sheet music. Topromote the sale of its products, JACKSON uses two promotiontechniques premiums and warranties.PREMIUMSThe premium is offered on the recorded and sheet music. Customersreceive a coupon for each P10 spent on recorded music and sheet music.Customers may exchange 200 coupons and P200 for a DVD player. JACKSONpays P340 for each DVD player and estimates that 60% of the couponsgiven to customers will be redeemed. A total of 6,500 DVD players usedin the premium program were purchased during the year and there were1,200,000 coupons redeemed in 2020.WARRANTIESACCNTG2♥ | 1Musical instruments and sound reproduction equipment are sold with aone-year warranty for replacement of parts and labor. The estimatedwarranty cost, based on past experience, is 2% of sales. Replacementparts and labor for warranty work totalled P1, 640,000 during 2020.JACKSON's sales for 2020 totaled P72,000,000 P54,000,000 frommusical instruments and sound reproduction and equipment andP18,000,000 from recorded music and sheet music. The balances in theaccounts related to warranties and premiums on January 1, 2020, wereas shown below:Inventory of premium DVD playersEstimated premium claims outstandingEstimated liability for warrantiesP 399,500448,0001,360,000

Offering of discounts and premiums is one of the sales promotion or marketing technique. Business…

Answered: What is the premium expense? A.…

Business

Accounting

What is the premium expense? A. 1,836,000 B. 840,000 C. 756,000 D. 2,189,500

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 10RE

See similar textbooks

Similar questions

BTS Music Shop carries a wide variety of musical instruments, sound reproduction equipment, recorded music, and sheet music. BTS uses two sales promotions techniques – warranties and premiums – to attract customers.Musical instruments and sound equipment are sold with one year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience is 2% of sales. The premium is offered on the recorded and sheet music. Customers may exchange 2,000 coupons and P200 for a Bluetooth speaker. BTS pays P320 for each speaker and estimates that 60% of the coupons given to customers will be redeemed. BTS’s total sales for 2019 were P72, 000,000 – P57, 000,000 from musical instruments and sound reproduction equipment and P15, 000,000 from recorded music and sheet. Replacement parts and labor for warranty work totalled P1, 640,000 during 2019. A total of 65,000 Bluetooth speakers used in the premium program were purchased during the year and there were P12, 000,000…
Irving Music Shop gives its customers coupons redeemable for a poster plus a Dixie Chicks CD. One coupon is issued for each dollar of sales. On the surrender of 100 coupons and $5.00 cash, the poster and CD are given to the customer. It is estimated that 80% of the coupons will be presented for redemption. Sales for the first period were $700,000, and the coupons redeemed totaled 340,000. Sales for the second period were $840,000, and the coupons redeemed totaled 850,000. Irving Music Shop bought 20,000 posters at $2.00/poster and 20,000 CDs at $6.00/CD.Instructions: Prepare the following entries for the two periods, assuming all the coupons expected to be redeemed from the first period were redeemed by the end of the second period.
ment, recorded music, and sheet music. BTS uses two sales promotions techniques – warranties and premiums – to attract customers. Musical instruments and sound equipment are sold with one year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience is 2% of sales. The premium is offered on the recorded and sheet music. Customers may exchange 2,000 coupons and P200 for a Bluetooth speaker. BTS pays P320 for each speaker and estimates that 60% of the coupons given to customers will be redeemed. BTS’s total sales for 2019 were P72, 000,000 – P57, 000,000 from musical instruments and sound reproduction equipment and P15, 000,000 from recorded music and sheet. Replacement parts and labor for warranty work totalled P1, 640,000 during 2019. A total of 65,000 Bluetooth speakers used in the premium program were purchased during the year and there were P12, 000,000 coupons redeemed in 2019. The accrual method is used by BTS to account for the warranty…
Serpent Home Depot carries wide variety of promotional techniques to attract customers. Kitchen and home appliances are sold in a one-year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience is 5% of sales. The premium is offered on the home furniture. Customer receive a coupon for each peso spent on home furniture. Customers may exchange 2,000 coupons and P50 for a rice cooker which company purchased at P340 for each rice cooker and estimates that 60% of the coupons given to customers will be redeemed. The company’s total sales for 2016 were P115,200,000 – P86,400,000 from kitchen and home appliances and P28,800,000 from home furniture. Replacement parts and labor for warranty work totaled P2,624,000 during 2016. A total of 5,200 rice cookers used in the premium program were purchased during the year and there were 9,600,000 coupons redeemed in 2016. The accrual method is used by the company to account for the warranty and premium…
In packages of its products, CUTE COMPANY includes coupons that may be presented at retail stores to obtain discounts on other CUTE COMPANY products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. CUTE COMPANY honors requests for coupon redemption by retailers up to 3 months after the consumer expiration date. CUTE COMPANY estimates that 60% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by CUTE COMPANY during 2021 is as follows: Consumer expiration date - December 31, 2021; Total payments to retailers as of December 31, 2021 - ₱165,000; Liability for unredeemed coupons as of December 31, 2021 - ₱99,000. What is the total face amount of coupons issued by CUTE COMPANY Inc. in 2021? A. ₱ 264,000 B. ₱ 400,000 C. ₱ 600,000 D. ₱ 440,000
In packages of its products, JENNIE Inc. includes coupons that may be presented at retail stores to obtain discounts on other JENNIE products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. JENNIE honors requests for coupon redemption by retailers up to 3 months after the consumer expiration date. JENNIE estimates that 60% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by JENNIE during 2021 is as follows: Consumer expiration date - December 31, 2021; Total payments to retailers as of December 31, 2021 - ₱165,000; Liability for unredeemed coupons as of December 31, 2021 - ₱99,000. What is the total face amount of coupons issued by JENNIE Inc. in 2021? ₱ 440,000 ₱ 400,000 ₱ 264,000 ₱ 600,000
In packages of its products, Kristine Company includes coupons that may be presented at retail stores to obtain discounts on other Kristine Company products. Retailers are reimbursed for the face amount of coupons plus 20% of that amount for handling costs. Kristine honors requests for coupon redemption by retailers up to three months after the consumer expiration date. Kristine estimates that 80% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by Kristine during 2020 is as follows: Consumer expiration date December 31, 2020 Total face amount of coupons issued 5,000,000 Total payments to retailers as of December 31, 2020 3,600,000 What amount should Kristine report as a liability for unredeemed coupons at December 31, 2020? Group of answer choices A. 400,000 B. 2,400,000 C. 1,200,000 D. 1,400,000
XYZ Inc offers a gift set to customers who send in $1.11 plus three coupon codes obtained from the purchase of the company's standard products. That is, a customer purchases three standard products which come with a coupon each, sends everything in along with the cheque for the amount above, and receives the gift set in the mail a few weeks later. During the year, the company acquired an adequate number of gift sets for $2.63 each using cash to meet the promotion's demand. During the year, the company sold 1,062,960 of its standard products for $4.15 each. The company estimated that 10% of the sales amount received from customers would relate to the gift set to be awarded. The company would expect 34.31% of the coupons to be sent in eventually, and, during the year, 255,110 coupons were redeemed. If the company followed IFRS using the revenue approach, how much unearned revenue would be shown as a liability at the end of the year for the coupons yet to be redeemed? a. $139,185 b.…
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?
During 2021, SUGA Company sold 485,000 boxes of cereals under a new sales promotional program. Each box contains one coupon, which entitles the customer to a premium that cost the company ₱75. Five coupons plus a remittance of ₱20 must be presented by the customer to receive a premium. SUGA estimated that 85% of the coupons will be redeemed. Actual premiums redeemed were 5,000 units. Additional information disclosed that ₱10 per premium is incurred for storage and distribution. Compute for the liability for the unredeemed coupons.
During 2021, SUGA Company sold 485,000 boxes of cereals under a new sales promotional program. Each box contains one coupon, which entitles the customer to a premium that cost the company ₱75. Five coupons plus a remittance of ₱20 must be presented by the customer to receive a premium. SUGA estimated that 85% of the coupons will be redeemed. Actual premiums redeemed were 5,000 units. Additional information disclosed that ₱10 per premium is incurred for storage and distribution. Compute for the premium expense for the year.
During 2021, SUGA Company sold 485,000 boxes of cereals under a new sales promotional program. Each box contains one coupon, which entitles the customer to a premium that cost the company ₱75. Five coupons plus a remittance of ₱20 must be presented by the customer to receive a premium. SUGA estimated that 85% of the coupons will be redeemed. Actual premiums redeemed were 5,000 units. Additional information disclosed that ₱10 per premium is incurred for storage and distribution. REQUIRED: 1. Compute for the liability for the unredeemed coupons. 2. Compute for the premium expense for the year.