Title | Answer KEY- Premium - NOTHING |
---|---|
Author | LILIAN DELA CRUZ |
Course | Accounting |
Institution | Araullo University |
Pages | 10 |
File Size | 183.6 KB |
File Type | |
Total Downloads | 147 |
Total Views | 246 |
ANSWER KEY (PREMIUM)PROBLEM 2-2 POINTS 15REQUIRED POINTS Prepare journal entries for 2020 and 2021 Statement classification of the account balances pertaining to the premium plan DR CR 2020 1 Cash 2,500,000 1 Sales 2,500,000. To record Sales2 Premium- towels 175,000 1 Cash 175,000. To record purchas...
ANSWER KEY (PREMIUM) PROBLEM 2-2 POINTS 15 REQUIRED POINTS 1. Prepare journal entries for 2020 and 2021 2. Statement classification of the account balances pertaining to the premium plan DR CR 2020 1 Cash 2,500,000.00 Sales 2,500,000.00 To record Sales 2 Premium- towels Cash To record purchased of 1,750 towels 3 Cash (1000x20) Premium Expense Premiums- towels (1000x100) To record redemption of 1,000 premiums 4 Premium Expense (1000x5) Cash To record distribution cost
175,000.00
2 Cash Sales To record 2021 sales
1 175,000.00
20,000.00 80,000.00
1 100,000.00
5,000.00
1 5,000.00
5 Premium Expense (600x85) 51,000.00 Estimated premium liability To record the liabiity for the premiums at the end of 2020 2021 1 Estimated premium liability Premium Expense To reverse entry made on December 2020
1
1 51,000.00
51,000.00
1 51,000.00
3,125,000.00
1 3,125,000.00
3 Premiums- towels Cash To record purchase of 2000 towels
200,000.00
4 Cash (1,800x20) Premium Expense Premiums- towels (1,800x100) To record redemption of 1,800 premiums
36,000.00 144,000.00
1 200,000.00
1 180,000.00
5 Premium Expense (1800x5) Cash To record distribution cost
9,000.00
6 Premium Expense (800x85) 68,000.00 Estimated premium liability To record the liabiity for the premiums at the end of 2021 Statement Classification Current Asset: Premiums- towels Current Liability: Estimated Premium Liability Selling Expense Premium Expense
PROBLEM 2-3 REQUIRED
1 9,000.00
2020
1 68,000.00
2021
75,000.00
95,000.00
51,000.00
68,000.00
136,000.00
170,000.00
POINTS
4
6
: Prepare journal entries to record the transactions relating to the premium plan for the current year
1 Cash (400,000x9) Sales To record sales
3,600,000.00
2 Premiums- ball point pen 900,000.00 Cash To record purchase of 10,000 ball point pens 3 Premiums Expense 30,000.00 Cash To record cost of premium plans (non-refundable) 4 Cash (8,000x5) Premium Expense (8000x85 Premiums-ball point pen (8000x90) To record redemption of 8,000 pens
40,000.00 680,000.00
5 Premium Expense (2,000x85) Estimated premium liabilty To record premium liability
170,000.00
Bottle caps to be redeemed (25% 400,000) Less: Bottle Caps redeemed (8,000x10) Bottle caps outstanding Premiums to be distributed (20,000/10)
1 3,600,000.00
1 900,000.00
1 30,000.00
1 720,000.00
1 170,000.00
100,000.00 80,000.00 20,000.00 2,000.00
6 Premium Expense (30x5000) 150,000.00 Cash 150,000.00 To record the payment of 30 grand prizes amounting to P5,000 each PROBLEM 2-4 POINTS 2 Required: Prepare appropriate journal entries for the current year t recognize the cash rebate program 1 Rebate Expense 800,000.00 Estimated rebate liability 800,000.00 To recognize the cash rebate program Rebate Coupon issued Expected to be redeemed (80%) Rebate coupon expected to be redeeme Amount per cash rebate Estimated rebate liability 2 Estimated Rebate liability Cash To record the payments to customer
500,000.00
5
7,000,000.00
1 6,125,000.00 875,000.00
328,125.00
Points to be redeemd (80% x 50,000) Revenue to be recognized in 2020 (15000/40000x875,000)
40,000.00
Points to be redeemd (85% x 50,000) Total points redeemed to 12/31/21 (15,000+7950)
1 500,000.00
2 Unearned revenue- points Sales To record redemption of 15,000 points
2021 1 Unearned revenue- points Sales To record redemption of 7,950 points
1
20,000.00 80% 16,000.00 50.00 800,000.00
PROBLEM 2-5 POINTS Required: Prepare journal entries from 2020 to 2023 2020 1 Cash Sales(7M/8Mx7M) Unearned Revenue - points (1M/8Mx7M) To record initial sales in 2020
1
1 328,125.00
328,125.00
144,375.00
1 144,375.00
42,500.00 22,950.00
Cummulative Revenue-12/31/-21 (22,950/42500x875000) Revenue Recoginzed in 2020 Revenue to be recognized in 2021
472,500.00 (328,125.00) 144,375.00
2022 1 Unearned revenue- points Sales To record redemption of 2,550 points
52,500.00 52,500.00
Points to be redeemd (85% x 50,000) Total points redeemed to 12/31/22 (15,000+7,950+2550) Cummulative Revenue-12/31/-22 (25,500/42,500x875,000) Cummulative Revenue-12/31/-21 Revenue to be recognized in 2022 2023 1 Unearned revenue- points Sales To record redemption of 15,000 points Points to be redeemd (90% x 50,000) Total points redeemed to 12/31/23 (15,000+7,950+2550+15000) Cummulative Revenue-12/31/-23 (40,500/45,000x875,000) Cummulative Revenue-12/31/-22 Revenue to be recognized in 2022 PROBLEM 2-6 #1 B. 384,000 Package of cereal sold Expected coupons to be redeemed Coupons to be redeemed Divided by: Coupons per premium Premiums to be redeemed Multiply: Premium Cost Premium expense for 2020
1
42,500.00 25,500.00 525,000.00 (472,500.00) 52,500.00
262,500.00
1 262,500.00
45,000.00 40,500.00 787,500.00 (525,000.00) 262,500.00 POINTS
2 1 160,000.00 60% 96,000.00 5.00 19,200.00 20.00 384,000.00
#2 B. 224,000 Coupons to be redeemed
1 96,000.00
Coupons redeemed
(40,000.00)
Balance Divided by: Coupons per premium # of Premiums Multiply: Premium Cost Estimated Premium Liability
56,000.00 5.00 11,200.00 20.00 224,000.00
PROBLEM 2-7
POINTS
2
#1 A. 6,000,000 Coupons to be redeemed (80% x500,000) Multiply: Net Premium Cost (50-40+5) Premium Expense
400,000.00 15.00 6,000,000.00
#2 B. 1,500,000 Coupons to be redeemed (80% x500,000) Coupons redeemed
400,000.00 (300,000.00)
Balance Multiply: Net Premium Cost (50-40+5) Liability on December 31, 2020
PROBLEM 2-8 B. 1,500,000
1
100,000.00 15.00 1,500,000.00
POINTS
1 1
Basketballs to be distributed (100,000x60%/10) Basketballs distributed Balance Multiply by Cost of Basketballs (4,125,000/5,500) Estimated Liability
6,000.00 (4,000.00) 2,000.00 750.00 1,500,000.00
PROBLEM 2-9 POINTS A. 350,000 Coupons expected to be redeemed Multiply by payment for each coupon (45+5( Total Liability for Coupon Payments as of December 31, 2020 Liability for Coupon- December 31, 2020 PROBLEM 2-10 #1 C 462,000 Coupons Issued Multiply: Expected to be redeemed
1
1 1 12,000.00 50.00 600,000.00 (250,000.00) 350,000.00
POINTS
2 1 600,000.00 70%
Handling Cost (420,000x10%) Premium Expense
420,000.00 42,000.00 462,000.00
#2 C. 242,000 Premium Expense Total payments Liability for unredeemed coupons
462,000.00 (220,000.00) 242,000.00
PROBLEM 2-11 B. 396,000 Packages Sold Expected coupons to be redeemed
1
POINTS
1 110,000.00 60% 66,000.00 5.00 13,200.00 30.00 396,000.00
Multiply: No. of coupons per package Multiply: Net Coupon Cost (80-50) Estimated Liability for Coupons PROBLEM 2-12 B. 915,000 Total Face value of Coupons issued Expected to be redeemed
1
POINTS
1 1 2,000,000.00 60% 1,200,000.00 (405,000.00) 795,000.00 120,000.00
Total Payments to retailers Handling Cost (10% of 1200,000) Liability for unredeemed coupons
915,000.00
PROBLEM 2-13 POINTS #1 A. 2,025,000 Expected Boxtops to be redeemed Divide: Premium per boxtops Expected premium to be redeemed Multiply: Net Cost per premium (25-10) Premium Expense
405,000.00 3.00 135,000.00 15.00 2,025,000.00
#2 B. 375,000 Premium Expense Premium Redeemed
2,025,000.00 1,650,000.00
Premium Liability PROBLEM 2-14 C. 750,000
2 1
1
375,000.00 POINTS
1 1
Boxtops to be redeemed (50% 100,000) Boxtops redeemed
50,000.00 (40,000.00)
Outstanding
10,000.00
Estimated Liability (10,000/2x150) PROBLEM 2-15 #1 D. 2,700,000
750,000.00 POINTS
Coupons to be redeemed in 2020(2Mx30%) Divide: Coupons per premium Multiply: Net Cost of Premium (50-10+5) Premium expense for 2020 #2 D. 900,000 Premium expense Premium Redeemed (400,000/10*45) Premium Liability on 12/31/20 #3 C. 3,375,000 Coupons to be redeemed in 2020(2.5Mx30%) Divide: Coupons per premium Multiply: Net Cost of Premium (50-10+5) Premium expense for 2021 4 C. 1,125,000 Premium Outstanding on 12/31/20 Premium expense for 2021 Premium redeemed on 2021 (700,000/10*45) Premium outstanding on 12/31/21 PROBLEM 2-16 POINTS 1 A. 1,000,000 Number of premium distributed in 2020 Number of premium to be distributed in the next period Total premiums in 2020 Multiply: Cost of premium Premium Expense in 2020 2 B. 200,000
4 1 600,000.00 10.00 60,000.00 45.00 2,700,000.00 1 2,700,000.00 1,800,000.00 900,000.00 1 750,000.00 10.00 75,000.00 45.00 3,375,000.00 1 900,000.00 3,375,000.00 (3,150,000.00) 1,125,000.00 4 1 20,000.00 5,000.00 25,000.00 40.00 1,000,000.00 1
Number of premium to be distributed in the next period Multiply: Cost of premium Estimated Liabilty 3 D. 1,920,000 Premiums Distributed in 2021 Premiums to be distributed in 2021
5,000.00 40.00 200,000.00 1 50,000.00 3,000.00
Total premiums in 2021 Premiums arising from 2020 sales and distributed in 2021
53,000.00 (5,000.00)
Premiums 2021 Multiply: Cost of premium
48,000.00 40.00
Premiums for 2021
1,920,000.00
4 C. 120,000 Premiums to be distributed in 2021 Multiply: Cost of premium
1 3,000.00 40.00
Estimated liability-2021
120,000.00
PROBLEM 2-17 B. 1,050,000 Rebate Coupon issued Multiply: Expected to be redeemed Coupons to be redeemed Coupons redeemed Outstanding Cash Rebate per coupon Estimated Liability
POINTS
PROBLEM 2-18 C. 170,000 Rebates coupon issued Multiply: Expected to be redeemed Coupons to be redeemed Cash Rebate per coupon
POINTS
1 80,000.00 70% 56,000.00 (35,000.00) 21,000.00 50.00 1,050,000.00
Rebate expense PROBLEM 2-19 POINTS 1 C. 1,020,000 Points- stand alone selling price (60,000x20 Sales Total Allocated price of points (1200/8000x6800,000)
1
1 1 10,000.00 85% 8,500.00 20.00 170,000.00 3 1 1,200,000.00 6,800,000.00 8,000,000.00
1,020,000.00
2 B. 489,600 Points to be redeemed in 2020 (60,000x100%) Revenue to be recognized in 2020 (28,800/60,000x1,020,000)
1 60,000.00 489,600.00
3 A. 224,400 Points redeemed in 2020 Points redeemed in 2021 Total points redeemed to 12/31/21
28,800.00 9,000.00 37,800.00
Cummulative revenue 12/31/21 (37,800/54,000x1,020,000) Revenue recogized in 2020
714,000.00 (489,600.00)
1
Revenue to be recognized in 2021 PROBLEM 2-20 1 C.600,000 Points- stand alone selling price Sales Total
224,400.00 POINTS
2 1 2,000,000.00 8,000,000.00 10,000,000.00
Allocated price of points (2M/10Mx8M)
1,600,000.00
Points to be redeemed in 2020 (100,000x80%)
80,000.00
Revenue to be recognized in 2020 (30,000/80,000x1,600,000)
600,000.00
2 B. 200,000 Points redeemed in 2020 Points redeemed in 2021
1 30,000.00 15,000.00
Total points redeemed to 12/31/21
45,000.00
Cummulative revenue 12/31/21 (45,000/90,000X1,600,000) Revenue recognized in 2020
800,000.00 (600,000.00)
Revenue to be recognized in 2021
200,000.00
PROBLEM 2-21 1 D. 6,650,000 Points- stand alone selling price Sales Total
POINTS
2 1 1,000,000.00 7,000,000.00 8,000,000.00
Allocated price of points (1M/8Mx7M)
875,000.00
Points to be redeemed in 2020
8,000.00
Revenue to be recognized in 2020-points (4800/8000x875,000) Sales Allocated price of points (7M/8Mx7M) Total Sales Revenue-2020
525,000.00 6,125,000.00 6,650,000.00
2 C. 175,000 Points redeemed in 2020 Points redeemed in 2021 Total points redeemed to 12/31/21
1 4,800.00 2,400.00 7,200.00
Cummulative revenue 12/31/21 (7,200/9,000X875,000) Revenue recognized in 2020 Revenue to be recognized in 2021 PROBLEM 2-22 1 B. 4,050,000 Product Sales Points
2 B. 150,000 Revenue from points Payment to airline (5,000x60) Net Revenue from points
700,000.00 (525,000.00) 175,000.00 POINTS
2 1
Selling Price 4,500,000.00 500,000.00
Allocated 4,050,000.00 450,000.00
5,000,000.00
4,500,000.00 1 450,000.00 (300,000.00) 150,000.00...