The entity has a long -term line of credit Matthew Co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Matthews P3 each. Matthew estimates that 45 percent of the coupons will be redeemed. Data for 2020 and 2021 are as follows: 2020 2021 Bags of dog food sold Leashes purchased 500,000 600,000 18,000 22,000 Coupons redeemed 120,000 150,000

The entity has a long -term line of credit Matthew Co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Matthews P3 each. Matthew estimates that 45 percent of the coupons will be redeemed. Data for 2020 and 2021 are as follows: 2020 2021 Bags of dog food sold Leashes purchased 500,000 600,000 18,000 22,000 Coupons redeemed 120,000 150,000

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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Phoenix Company, places a coupon in each box of its product. Customers may send in ten coupons and P3.00, and the company will send them a romantic pillow. Sufficient pillows were purchased at P5.40 a piece. During 2019, 1,260,000 boxes were sold. It was estimated that a total of 5% of the coupons will be redeemed. In 2019, 18,000 coupons were redeemed. How much is the liability for premiums outstanding as of December 31, 2019? 43,200 24,300 15,120 45,200 10,800
During 2020, Day Company sold 500,000 boxes of cake mix under a new sales promotional program. Each box contained one coupon, which entitled the customer to a baking pan upon remittance of P40. The entity paid P50 per pan and P5 for handling and shipping. The entity estimated that 80% of the coupons will be redeemed, even though only P300,000 coupons had been processed during 2020. 1. What amount should be reported as premium expense for P2020? 2. What amount should be reported as liability for unredeemed coupons on December 31, 2020?
3. Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85% 2023 15,000 90% Required: Prepare journal entries from 2020 to 2023.
Sweet Dates Company offers a premium to its customers—a glass bowl (cost to Sweet Dates is $0.90) upon return of 40 coupons. Two coupons are placed in each box of dates sold. The company estimates, on the basis of past experience, that only 70% of the coupons will ever be redeemed. During 2019, 10 million boxes of dates are sold at $0.30 each. Eight million coupons are redeemed during 2019. Sweet Dates purchased 360,000 glass bowls for the plan on January 1, 2019. Required: 1. Prepare the journal entries related to the sale of dates and the premium plan in 2019. 2. Show how the preceding items would be reported on the December 31, 2019, balance sheet.
During 2020, Gray Company sold 500,000 boxes of cake mix under a new sales promotional program. Each box contained one coupon, which entitled the customer to a baking pan upon remittance of P40. The entity paid P50 per pan and P5 for handling and shipping. The entity estimated that 80% of the coupons will be redeemed, even though only 300,000 coupons had been processed during 2020. 2a. What amount should be reported as premium expense for 2020? a. P 2,000,000 b. P 4,500,000 c. P 6,000,000 d. P 7,500,000 2b. What amount should be reported as liability for unredeemed coupons on December 31, 2020? a. 1,000,000 b. 1,500,000 c. 3,000,000 d. 5,000,000
Besik Inc. operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. During 2020, the entity issued 25,000 award credits and expects that 85% of these shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,500,000. In 2020, the entity sold goods to customers for a total consideration of P 8,500,000 based on stand-alone selling price. On Dec. 31, 2020, 10,000 award credits have been redeemed. In 2021, the management revised expectations and expects 80% of the award credits to be redeemed. In 2021, 5,000 award credits redeemed. What is the revenue earned from award credits for 2021? *a. P 956,250b. P 600,000c. P 356,250d. P 318,750
luna Company sold 700,000 boxes of “puto” mix under a new sales promotional program. Each box contains one coupon, which if submitted with P40, entitles the customer to a kitchen knife. The company pays P60 per knife and P5 for handling and shipping. It estimates that 70% of the coupons will be redeemed, even though only 250,000 coupons had been processed during 2020. How much should luna report as liability for unredeemed coupons at December 31, 2020?
Crane Bakery began selling gift cards in 2025. Based on industry norms, they expect that 30% of the gift cards will not be redeemed. In 2025, the bakery sold gift cards with a value of $2000. During that period, gift cards with a value of $500 were redeemed. The amount of revenue that Crane will recognize in 2025 with regard to the gift cards is O $650 O $500 O $2000 O $714
What is the total face amount of coupons issued by JENNIE Inc. in 2021? In packages of its products, JENNIE Inc. includes coupons that may be presented at retail stores to obtain discounts on other JENNIE products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. JENNIE honors requests for coupon redemption by retailers up to 3 months after the consumer expiration date. JENNIE estimates that 60% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by JENNIE during 2021 is as follows: Consumer expiration date - December 31, 2021; Total payments to retailers as of December 31, 2021 - ₱165,000; Liability for unredeemed coupons as of December 31, 2021 - ₱99,000. a.) ₱ 440,000 b.) ₱ 400,000 c.) ₱ 600,000 d.) ₱ 264,000
James Company has an arrangement with with Jorge Company that operates a customer loyalty program. The entity grants loyalty points of Jorge Company when they spend a specified amount on purchases. Program members can redeem their points with Jorge Company. The points have no expiry date. During 2020, the customers earned 60,000 points. The stand-alone selling price of each loyalty point is estimated at P20. The sales during 2020 amounted to P6,800,000 based on stand-alone selling price. According to Jorge Company: On December 31, 2020, 28,800 points have been redeemed in exchange for purchases. In 2021, customers have redeemed 9,000 points. How much is the revenue to be recognized by James in 2020?
James Company has an arrangement with with Jorge Company that operates a customer loyalty program. The entity grants loyalty points of Jorge Company when they spend a specified amount on purchases. Program members can redeem their points with Jorge Company. The points have no expiry date. During 2020, the customers earned 60,000 points. The stand-alone selling price of each loyalty point is estimated at P20. The sales during 2020 amounted to P6,800,000 based on stand-alone selling price. According to Jorge Company: On December 31, 2020, 28,800 points have been redeemed in exchange for purchases. In 2021, customers have redeemed 9,000 points. How much is the initial unearned customer loyalty points to be recognized by James?
(To record the sales) (To record premiums redeemed) (To record a liability for premiums) ||