Eastern Marketing sells split type air-conditioners. The company provides its customers an option to purchase warranty contract for a two-year period for P2,250 for every unit of the air conditioner purchased priced at P45,000. If the customer chooses not to buy the warranty contract, the air-conditioner sells for P42,750. Sale of warranty contracts and repairs are made evenly throughout the year. Based on past records of the entity, 30% of repairs are done in the first year from the date of sale and 70% in the second year. During 2020, Eastern sold 500 packages of the air-conditioners and warranty contracts. Cost of servicing the units during 2020 amounted to P95,000. Based on the given data, Eastern Company should report the following: Unearned Revenue from Warranty Contracts, 12/31/20 P956,250 P787,500 P787,500 P956,250 a. b. C. d. Profit from Warranty Contracts for year 2020 P168,750 P168,750 P 73,750 P 73,750 MC25 Laxada Marketing launched a new sales promotional program. For every 20 seals of proof of purchase of their product, customers receive a double-layer reversible umbrella costing P200 each. This umbrella may separately be sold for P300 each. The company estimates that 75% of the seals of proof of purchase reaching the consumer market will be redeemed. Product sales with seals of proof of purchase - 20,000 units for a total of P12,000,000 Premiums distributed to customers - 500 umbrellas How much of the total transaction price is allocated to the premium? A P 150,000 B P 225,000 CP 300,000 D P O

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Eastern Marketing sells split type air-conditioners. The company provides its customers an option to purchase warranty contract for a two-year period for P2,250 for every unit of the air conditioner purchased priced at P45,000. If the customer chooses not to buy the warranty contract, the air-conditioner sells for P42,750. Sale of warranty contracts and repairs are made evenly throughout the year. Based on past records of the entity, 30% of repairs are done in the first year from the date of sale and 70% in the second year. During 2020, Eastern sold 500 packages of the air-conditioners and warranty contracts. Cost of servicing the units during 2020 amounted to P95,000. Based on the given data, Eastern Company should report the following: Unearned Revenue from Warranty Contracts, 12/31/20 P956,250 P787,500 P787,500 P956,250 a. b. C. d. Profit from Warranty Contracts for year 2020 P168,750 P168,750 P 73,750 P 73,750 MC25 Laxada Marketing launched a new sales promotional program. For every 20 seals of proof of purchase of their product, customers receive a double-layer reversible umbrella costing P200 each. This umbrella may separately be sold for P300 each. The company estimates that 75% of the seals of proof of purchase reaching the consumer market will be redeemed. Product sales with seals of proof of purchase - 20,000 units for a total of P12,000,000 Premiums distributed to customers - 500 umbrellas How much of the total transaction price is allocated to the premium? A P 150,000 B P 225,000 CP 300,000 D P O

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Accounting for Guarantees and Warranties

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.

Similar questions