How much should be recorded as premium expense

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Question - Liabilities - Give the Correct Answer. Show Complete Solution and Explain: Each package of bath soap sold by Jake Corporation comes with one coupon. Customers who bring in 10 vouchers and a P10 remittance will get a towel as a premium. The premium distribution cost is P5. According to experience, only 30% of the coupons will be redeemed.

 

2021

2022

Boxes of soap sold

2,000,000

2,500,000

No. of towels purchased at P50 each

50,000

80,000

Coupons redeemed

400,000

700,000

For 2021, how much should be recorded as premium expense?

On Dec. 31, 2021, how much should be recorded as estimated premium liability?

For 2022, how much should be recorded as premium expense?

On Dec. 31, 2022, how much should be recorded as estimated premium liability?

Reference no: EM133057740

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