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Question - On December 31, 2019, Leanna Company's estimated premiums payable amounted to P1,400,000. On 2020 the company has an on-going promotional program whereby each washing machine sold comes wit h5 coupons, 25 coupons plus P2,000 shall entitle the customer a dryer which originally costs P6,000. The dryers can be redeemed 2 years after receipt of the coupons upon purchase. The company estimates that 40% of the coupons issues with the washing machine sold will ultimately be presented for the premiums redemption.
The beginning inventory of dryings was at 300 units. During the year additional 1,000 dryers were acquired. An inventory of the remaining dryers on hand at year-end places he count at 240 units. The company sold 12,000 units of washing machine during the current year. What is the correct estimated premiums payable as of December 31, 2020?
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