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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?

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?

FINANCIAL ACCOUNTING
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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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?

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