1. What is the premium expense for 2021?2. What is the estimated liability for premiums on December 31, 2021? In an effort to increase sales, Mill Company inaugurated a sales promotional campaign onJune 30, 2021. The entity placed a coupon redeemable for a premium in each package ofcereal sold. Each premium cost P20 and five coupons must be presented by a customerto receive a premium. The entity estimated that only 60% of the coupons issued wouldbe redeemed.For the six months ended December 31, 2021, the following information is available:Packages of cereal soldPremium purchasedCoupons redeemed160,00012,00040,000

Premium (Gift) means the product given free of cost to the customer on fulfilling the certain…

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1. What is the premium expense for 2021? 2. What is the estimated liability for premiums on December 31, 2021?

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

1. What is the premium expense for 2021?

2. What is the estimated liability for premiums on December 31, 2021?

In an effort to increase sales, Mill Company inaugurated a sales promotional campaign on
June 30, 2021. The entity placed a coupon redeemable for a premium in each package of
cereal sold. Each premium cost P20 and five coupons must be presented by a customer
to receive a premium. The entity estimated that only 60% of the coupons issued would
be redeemed.
For the six months ended December 31, 2021, the following information is available:
Packages of cereal sold
Premium purchased
Coupons redeemed
160,000
12,000
40,000

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