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Question - Mr. Clean Company included one coupon in each box of laundry soap sold at P100 per box. A towel was offered as a premium to customers who send in 10 coupons and a remittance of P10. Distribution cost of premium is P5. Experience indicated that only 30% of the coupons will be redeemed.
2017
2018
Boxes of soap sold
200,000
250,000
Numbers of towels purchased at P50 each
5,000
8,000
Coupons redeemed
40,000
70,000
Required -
-Journalize the sales, purchase of premiums, redemption of premium, and accrual of premium in 2017 and 2018.
-Compute for the total premium expense for 2017 and 2018.
-Compute for the estimated premium liability on December 31, 2017 and 2018.
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