Reference no: EM133186038
Problem 1 - In an effort to increase sales, Careful Company launched a sales promotional campaign. Careful placed a coupon redeemable for a premium in each package of product sold. Each premium costs P20 and five coupons must be presented by a customer to receive a premium. Careful estimated that only 60% of the coupons issued will be redeemed. The following information are available for the year 2021:
Packages sold - 160,000
Premiums purchased - 12,000
Coupons redeemed - 40,000
What is the estimated liability for premiums to be reported on December 31, 2021?
a. P160,000
b. P224,000
c. P288,000
d. P384,000
Problem 2 - Dimples Company sells subscriptions to a specialized directory, which is issued semi-annually and distributed to subscribers on April 15 and October 15. Subscriptions acquired after the March 31 and September 30 deadlines are kept for the following issue. Cash from subscribers is received evenly throughout the year and is credited to deferred subscription revenues. The following data are for 2021:
Unearned Subscriptions, 12/31/2020 - P3,000,000
Cash receipts from subscribers - P14,400,000
How much should Dimples report Unearned Subscription on its December 31, 2021 statement of financial position?
a. P3,600,000
b. P6,660,000
c. P7,200,000
d. P10,000,000