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Siomai Company inaugurated a sales promotional campaign on September 01, 2020 in its desire to improve sales. Siomai placed a coupon redeemable for a premium in each ream of bond papers sold. Each premium costs P20 and five coupons must be presented by a customer to receive a premium. It is estimated that only 70% of the coupons issued will be redeemed. For the four months ended December 31, 2020, there were 400,000 reams sold. Siomai purchased 30,000 premiums for the year and 100,000 coupons were redeemed. The company treated the premium as a selling expense. How much is the estimated liability for premium claims outstanding on December 31, 2020? A. 720,000 B. 1,020,000 C. 1,800,000 D. 3,600,000 E. 0

Siomai Company inaugurated a sales promotional campaign on September 01, 2020 in its desire to improve sales. Siomai placed a coupon redeemable for a premium in each ream of bond papers sold. Each premium costs P20 and five coupons must be presented by a customer to receive a premium. It is estimated that only 70% of the coupons issued will be redeemed. For the four months ended December 31, 2020, there were 400,000 reams sold. Siomai purchased 30,000 premiums for the year and 100,000 coupons were redeemed. The company treated the premium as a selling expense. How much is the estimated liability for premium claims outstanding on December 31, 2020? A. 720,000 B. 1,020,000 C. 1,800,000 D. 3,600,000 E. 0

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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Siomai Company inaugurated a sales promotional campaign on September 01, 2020 in its desire to improve sales. Siomai placed a coupon redeemable for a premium in each ream of bond papers sold. Each premium costs P20 and five coupons must be presented by a customer to receive a premium. It is estimated that only 70% of the coupons issued will be redeemed. For the four months ended December 31, 2020, there were 400,000 reams sold. Siomai purchased 30,000 premiums for the year and 100,000 coupons were redeemed. The company treated the premium as a selling expense.

How much is the estimated liability for premium claims outstanding on December 31, 2020?

A. 720,000
B. 1,020,000
C. 1,800,000
D. 3,600,000
E. 0

 

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