Miracle Company manufactures a product that is packaged and sold. Each sale is accompanied by 3 coupons to be able to purchase a plate. A plate is offered to customers sending two coupons accompanied by a remittance of P2. 2018 2019 Sale @ 250 Purchase of premium, P10 per plate Number of plates distributed as premiums Premiums distributed Distribution cost P5 per plate QUESTIONS: 1) What is the premium expense for 2018? 2) How much is the premium liability as of December 31, 2019? 4,200,0003,600,000 580,000 390,000 80% 70% 17,000 13,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Miracle Company manufactures a product
that is packaged and sold. Each sale is
accompanied by 3 coupons to be able to
purchase a plate. A plate is offered to
customers sending two coupons
accompanied by a remittance of P2.
2018
2019
Sale @ 250
Purchase of premium,
P10 per plate
Number of plates
distributed as premiums
Premiums distributed
Distribution cost P5 per
plate
QUESTIONS:
4,200,0003,600,000
580,000 390,000
80%
70%
17,000
13,000
1) What is the premium expense for 2018?
2) How much is the premium liability as of
December 31, 2019?
Transcribed Image Text:Miracle Company manufactures a product that is packaged and sold. Each sale is accompanied by 3 coupons to be able to purchase a plate. A plate is offered to customers sending two coupons accompanied by a remittance of P2. 2018 2019 Sale @ 250 Purchase of premium, P10 per plate Number of plates distributed as premiums Premiums distributed Distribution cost P5 per plate QUESTIONS: 4,200,0003,600,000 580,000 390,000 80% 70% 17,000 13,000 1) What is the premium expense for 2018? 2) How much is the premium liability as of December 31, 2019?
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