In an effort to increase sales, Rofix Company began a sales promotion campaign on June 30, 2002. Part of this promotion included placing a special coupon in each package of candy bars sold. Customers were able to redeem ten coupons for a Frisbee. Each premium costs Rofix P1.50. Rofix estimated that 60 percent of the coupons issued will be redeemed. For the six months ended December 31, 2002, the following information is available: Packages of candy bars sold 3,200,000 Premiums purchased Coupons redeemed 172,000 1,425,000 Requirements: a. How much is the premium expense in 2002? b. How much is the estimated liability as of December 31, 2002?

In an effort to increase sales, Rofix Company began a sales promotion campaign on June 30, 2002. Part of this promotion included placing a special coupon in each package of candy bars sold. Customers were able to redeem ten coupons for a Frisbee. Each premium costs Rofix P1.50. Rofix estimated that 60 percent of the coupons issued will be redeemed. For the six months ended December 31, 2002, the following information is available: Packages of candy bars sold 3,200,000 Premiums purchased Coupons redeemed 172,000 1,425,000 Requirements: a. How much is the premium expense in 2002? b. How much is the estimated liability as of December 31, 2002?

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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