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How much should be reported as premium expense

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Question - Lancer Company inaugurated a promotional campaign on January 2, 2014 to promote the stability of their product. Lancer company placed a coupon redeemable for a premium in each package of napkin sold at P200. Each premium costs P25 and 10 coupons must be presented by a customer to receive a premium. Lancer estimated that only 70% of the coupons issued would be redeemed. For the 6 months ended July 31,2020, the following transactions occurred:

Packages of napkin sold P120,000

Premium purchased 30,000

Coupons redeemed 54,000

How much should be reported as PREMIUM EXPENSE and ESTIMATED LIABILITY for coupons on the fiscal year ended July 31, 2020?

Reference no: EM132943683

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