Hello tutor please need answer the accounting question A cereal company includes one premium coupon in every cereal box.Upon returning 10 such coupons to the company, a customer will besent a free cereal bowl. In a recent year, the company sold 200,000boxes of cereal for $1 a box. It is estimated that 20% of the couponswill be returned.If the cereal bowls cost the company $3 each, what amount ofliability for premium redemptions must be recorded by thecompany?a. $ 6,000b. $ 12,000C. $200,000d. $ 24,000

Step 1: Define LiabilityWhen an individual or a company owes something to somebody, generally, a sum…

Answered: A cereal company includes one premium…

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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On the back of its cereal boxes, Tiger Cereal Company offers a premium to its customers. The premium, a toy truck, may be claimed by sending in $1 plus 10 coupons; one coupon is included in each box of cereal sold. Tiger estimates, based on past experience, that 60% of the coupons will be redeemed. During 2019, Tiger purchased 240,000 toy trucks at $1.25 each for the premium promotion and sold 5,000,000 boxes of cereal at $1.80 per box. In 2019, 2,200,000 coupons were redeemed. Required: 1. Prepare the journal entries related to the previous promotion (including sales) for 2019. 2. Show how the items related to the premium plan would be reported on the December 31, 2019, balance sheet.
Magtatagumpay Company inaugurated a promotional campaign on January 2, 2029 to promote the salability of their product, Ghost Cereals. Magtatagumpay placed a coupon redeemable for a premium in each package of cereal sold at P200. Each premium, a limited edition water bottle cooling device, costs P25 and 10 coupons must be presented by a customer to receive a premium. Magtatagumpay estimated that only 70% of the coupons issued would be redeemed. For the 6 months ended July 31, 2019, the following transactions occurred: Packages of cereal sold 120,000 Premium purchased 30,000 Coupons redeemed 54,000 How much should be reported as premium expense for coupons on the fiscal year ended July 31, 2029?
In an effort to increase sales, Relay 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 160,000 Premium purchased 12,000 Coupons redeemed 40,000 What is the estimated liability for premiums on December 31, 2021? O P160,000 O P288,000 O P224,000 P384,000
In an effort to increase sales, DARIO Company inaugurated a sales promotional campaign on June 30, 2021. DARIO Company placed a coupon redeemable for a premium in each package of cereal sold. Each premium cost DARIO Company P20 and five coupons must be presented by a customer to receive a premium. DARIO Company estimated that only 60% of the coupons issued will be redeemed. For the six months ended December 31, 2021 the following information is available. Package of cereal sold Premiums purchased Coupons redeemed 160,000 12,000 40,000 What is the estimated liability for premiums on December 31, 2021 A. 160,000 B. 384,000 C. 224,000 D. 288,000
What amount should be reported as premium expense for the current year?
Please show your solution in good accounting form In 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 costs 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. a. Compute for the liability for the unredeemed coupons. b. Compute for the premium expense for the year.
On July 1, 2021, Sansrival Company started a sales promotional campaign. In each box of cereal sold, Sansrival inserted a coupon redeemable for a premium. To receive a premium, each customer must submit five coupons. Sansrival’s cost for each premium is P6. Sansrival estimated that 60% of the coupons issued would be redeemable. For the six months ended December 31, 2021, the following information is available: Boxes of cereal sold 800,000 Coupons Redeemed 200,000 How much should be the estimated liability for premium claims outstanding at December 31, 2021?
In an effort to increase sales, Mill Company inaugurated a sales promotional campaign on June 30, 2020. 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 will be redeemed. For the six months ended December 31, 2020. the following information is available: Packages of cereal sold Premiums purchased Coupons redeemed 1. What amount should be reported as premium expense for 2020? 2. What is the estimated liability for premium claims outstanding on December 31, 2020? 160,000 12,000 40,000
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 an effort to increase sales, ABC Company inaugurated a sales promotional campaign on June 30, 2021. ABC Company placed a coupon redeemable for a premium in each package of cereal sold. Each premium cost ABC Company P20 and five coupons must be presented by a customer to receive a premium. ABC Company estimated that only 60% of the coupons issued will be redeemed. For the six months ended December 31, 2021 the following information is available. Package of cereal sold Premiums purchased Coupons redeemed 160,000 12,000 40,000 What is the estimated liability for premiums on December 31, 2021?
Ben and Co. inaugurated a sales promotion campaign on May 31, 2019, whereby Ben placed a coupon in each package of chocolate sold, the coupons being redeemable for a premium. Each premium costs Ben P 50 and a customer to receive a coupon must present five coupons. Ben estimated that only 60 % of the coupon issued would be redeemed. For the seven months ended Dec. 3, 2019, the following information is available: Packages of chocolates sold 400,000 Premium purchased 30,000 Coupons redeemed 100,000 How much is the estimated liability for premium claims outstanding at Dec. 31, 2019? * A.P 180,000 B.P 140,000 C.P 240,000 D.P 100,000
SM Food Company distributes to consumers coupons which may be presented (on or before a stated expiration date) to grocers for discounts on certain products of SM. The grocers are reimbursed when they send the coupons to SM. In SM's experience, 50% of such coupons are redeemed, and generally one month elapses between the date a grocer receives a coupon from a consumer and the date SM receives it. During 2022, SM issued two separate series of coupons as follows (see attached image). The only journal entries to date recorded debits to coupon expense and credits to cash of P536,000. The December 31, 2022 Statement of Financial Position should include a liability for unredeemed coupons of ____________.

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