The Ri Jung Hyuk Company sold 1,500,000 boxes of cake mix during the year under a new sales promotion program. Each box contains one coupon that, submitted with P40.00 entitles the customer to a baking pan. The Ri Jung Hyuk pays P50.00 per pan. The entity treated the premiums as selling expense. The company estimates that 80% of the coupons will be redeemed even though only 900,000 coupons had been processed during the year. What amount should Ri Jung Hyuk report as a liability for unredeemed coupons at year end?
The Ri Jung Hyuk Company sold 1,500,000 boxes of cake mix during the year under a new sales promotion program. Each box contains one coupon that, submitted with P40.00 entitles the customer to a baking pan. The Ri Jung Hyuk pays P50.00 per pan. The entity treated the premiums as selling expense. The company estimates that 80% of the coupons will be redeemed even though only 900,000 coupons had been processed during the year. What amount should Ri Jung Hyuk report as a liability for unredeemed coupons at year end?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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The Ri Jung Hyuk Company sold 1,500,000 boxes of cake mix during the year under a new sales promotion program. Each box contains one coupon that, submitted with P40.00 entitles the customer to a baking pan. The Ri Jung Hyuk pays P50.00 per pan. The entity treated the premiums as selling expense. The company estimates that 80% of the coupons will be redeemed even though only 900,000 coupons had been processed during the year.
What amount should Ri Jung Hyuk report as a liability for unredeemed coupons at year end?
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