Serpent Home Depot carries wide variety of promotional techniques to attract customers. Kitchen and home appliances are sold in a one-year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience is 5% of sales. The premium is offered on the home furniture. Customer receive a coupon for each peso spent on home furniture. Customers may exchange 2,000 coupons and P50 for a rice cooker which company purchased at P340 for each rice cooker and estimates that 60% of the coupons given to customers will be redeemed. The company’s total sales for 2016 were P115,200,000 – P86,400,000 from kitchen and home appliances and P28,800,000 from home furniture. Replacement parts and labor for warranty work totaled P2,624,000 during 2016. A total of 5,200 rice cookers used in the premium program were purchased during the year and there were 9,600,000 coupons redeemed in 2016. The accrual method is used by the company to account for the warranty and premium costs for financial reporting purposes. The balance in the accounts related to warranties and premiums on January 1, 2016, were as shown below: Inventory of premium items 340,000 Estimated liabilities for premium 716,000 Estimated liabilities for warranties 2,176,000 Promotional expense related to premiums for the current year 2016 is Estimated liabilities for premiums as of December 31, 2016 is Estimated liabilities for warranties as of December 31, 2016 is
Serpent Home Depot carries wide variety of promotional techniques to attract customers. Kitchen and home appliances are sold in a one-year warranty for replacement of parts and labor. The estimated warranty cost, based on past experience is 5% of sales.
The premium is offered on the home furniture. Customer receive a coupon for each peso spent on home furniture. Customers may exchange 2,000 coupons and P50 for a rice cooker which company purchased at P340 for each rice cooker and estimates that 60% of the coupons given to customers will be redeemed.
The company’s total sales for 2016 were P115,200,000 – P86,400,000 from kitchen and home appliances and P28,800,000 from home furniture. Replacement parts and labor for warranty work totaled P2,624,000 during 2016. A total of 5,200 rice cookers used in the premium program were purchased during the year and there were 9,600,000 coupons redeemed in 2016.
The accrual method is used by the company to account for the warranty and premium costs for financial reporting purposes. The balance in the accounts related to warranties and premiums on January 1, 2016, were as shown below:
|
Inventory of premium items |
340,000 |
|
Estimated liabilities for premium |
716,000 |
|
Estimated liabilities for warranties |
2,176,000 |
- Promotional expense related to premiums for the current year 2016 is
- Estimated liabilities for premiums as of December 31, 2016 is
- Estimated liabilities for warranties as of December 31, 2016 is
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