Yummy Candy Company offers a coffee mug as a premium for every ten50-centavo candy bar wrappers presented by customers together withP1.00. The purchase price of each mug to the company is P0.90; inaddition it costs P0.60 to mail each mug. The results of the premium planfor the years 2004 and 2005 are as follows (assume all purchases andsales are for cash):2004960,0007,500,0002005Coffee mugs purchased800,000Candy bars soldWrappers redeemed2004 wrappers expected to be redeemed in 2005 2,62005 wrappers expected to be redeemed in 20069,000,0003,800,0005,600,0003,600,000Requirements:a. Compute for the premium expenses in 2004 and 2005, respectively.Assume expectations coincide with actual results.b. Compute for the liabilities for premium as of December 31, 2004 andDecember 31, 2005, respectively.

a) Premium Expense for 2004 = (3,800,000+2,600,000)/10 x (P 0.90+P 0.60- P1.00) = P 320,000 Premium…

Yummy Candy Company offers a coffee mug as a premium for every ten 50-centavo candy bar wrappers presented by customers together with P1.00. The purchase price of each mug to the company is P0.90; in addition it costs P0.60 to mail each mug. The results of the premium plan for the years 2004 and 2005 are as follows (assume all purchases and sales are for cash): 2004 960,000 2005 800,000 Coffee mugs purchased Candy bars sold Wrappers redeemed 2004 wrappers expected to be redeemed in 2005 2,600,000 2005 wrappers expected to be redeemed in 2006 7,500,000 9,000,000 3,800,000 5,600,000 3,600,000 Requirements: a. Compute for the premium expenses in 2004 and 2005, respectively. Assume expectations coincide with actual results. b. Compute for the liabilities for premium as of December 31, 2004 and December 31, 2005, respectively.

Yummy Candy Company offers a coffee mug as a premium for every ten 50-centavo candy bar wrappers presented by customers together with P1.00. The purchase price of each mug to the company is P0.90; in addition it costs P0.60 to mail each mug. The results of the premium plan for the years 2004 and 2005 are as follows (assume all purchases and sales are for cash): 2004 960,000 2005 800,000 Coffee mugs purchased Candy bars sold Wrappers redeemed 2004 wrappers expected to be redeemed in 2005 2,600,000 2005 wrappers expected to be redeemed in 2006 7,500,000 9,000,000 3,800,000 5,600,000 3,600,000 Requirements: a. Compute for the premium expenses in 2004 and 2005, respectively. Assume expectations coincide with actual results. b. Compute for the liabilities for premium as of December 31, 2004 and December 31, 2005, respectively.

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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