Balley Co. includes one coupon in each bag of dog food it sells. In return for 3 coupons, customers receive a dog toy that the company purchases for P1.50 each. Balley's experience indicates that 60 percent of the coupons will be redeemed. During 2004, 100,000 bags of dog food were sold, 12,000 toys were purchased, and 45,000 coupons were redeemed. During 2005, 120,000 bags of dog food were sold, 16,000 toys were purchased, and 60,000 coupons were redeemed. Requirements: a. Compute for the premium expenses in 2004 and 2005, respectively. b. Compute for the liabilities for premium as of December 31, 2004 and December 31, 2005, respectively.
Balley Co. includes one coupon in each bag of dog food it sells. In return for 3 coupons, customers receive a dog toy that the company purchases for P1.50 each. Balley's experience indicates that 60 percent of the coupons will be redeemed. During 2004, 100,000 bags of dog food were sold, 12,000 toys were purchased, and 45,000 coupons were redeemed. During 2005, 120,000 bags of dog food were sold, 16,000 toys were purchased, and 60,000 coupons were redeemed. Requirements: a. Compute for the premium expenses in 2004 and 2005, respectively. b. Compute for the liabilities for premium as of December 31, 2004 and December 31, 2005, respectively.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Question
100%
Balley Co. includes one coupon in each bag of dog food it sells. In return for 3 coupons, customers receive a dog toy that the company purchases for P1.50 each. Balley's experience indicates that 60 percent of the coupons will be redeemed. During 2004, 100,000 bags of dog food were sold, 12,000 toys were purchased, and 45,000 coupons were redeemed. During 2005, 120,000 bags of dog food were sold, 16,000 toys were purchased, and 60,000 coupons were redeemed.
Requirements:
a. Compute for the premium expenses in 2004 and 2005, respectively.
b. Compute for the liabilities for premium as of December 31, 2004 and December 31, 2005, respectively.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education