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Question - Mott co. includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a lease. The leashes cost Mott $3 each. Mott estimates that 40 percent of the coupons will be redeemed. Data for 2022 and 2023 are as follows:
2022
2023
Bags of dog food sold
500,000
600,000
Leashes purchased
18,000
22,000
Coupons redeemed
120,000
150,000
Required -
1. What is the premium expense for 2022?
2. What is the premium liability at December 31, 2022?
3. What is the premium liability at December 31, 2023?
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