Answered: 2022 Boxes of coffee sold 800,000…

2022 Boxes of coffee sold 800,000 Number of planners purchased at P50 each 20,000 Coupons redeemed 160,000 What is the estimated premium liability on Dec. 31, 2022?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

ABC Company includes one coupon in each box of coffee it sells. A planner is offered as a premium to customers who send in 10 coupons and a remittance of P10. Distribution cost of premium is P5. Experience indicates that only 30% of the coupons will be redeemed.

2022
Boxes of coffee sold
800,000
Number of planners purchased at P50 each
20,000
Coupons redeemed
160,000
What is the estimated premium liability on Dec. 31, 2022?

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