LIABILITIES & EQUITY ALASTOY BSA 2- DOCX

Title	LIABILITIES & EQUITY ALASTOY BSA 2-
Author	James Salvador
Pages	91
File Size	124.4 KB
File Type	DOCX
Total Downloads	344
Total Views	554

Summary

Description

PREMIUMS AND WARRANTY LIABILITY 1. In December 2016, Cucumber Company began including one coupon in each package of goodies that it sells and offering a pen in exchange for P30 and three coupons. The pens cost P60 each. Eventually, 70% of the coupons will be redeemed. During December, the entity sold 120,000 packaged of goodies and no coupons were redeemed. On December 31, 2016, what amount should be reported as estimated liability for coupons? a. 1,200,000 c. 1,680,000 b. 840,000 d. 2,400,000 Answer is b Solution: Coupons to be redeemed (70% x 120,000) 84,000 Divide by 3 Number of pens 28,000 Multiply by net cost of pen (60-30) 30 Estimated liability – December 31, 2015 840,000 2. At the beginning of the current year, Masigasig Company began marketing a bottled chocolate called ChocoMoTo. To help promote the product, the management is offering a special ChocoMoTo mug to each customer for every 10 marked bottle cops of ChocoMoTo. The entity estimated that out of the 250,000 bottles of ChocoMoTo sold during the year, only 80% of the marked bottle cops would be redeemed. During the year, the entity purchased 10,000 mugs at a total cost of P400,000 and already distributed 15,000 mugs to customers. What is the premium liability at year-end? a. 200,000 c. 400,000 b. 800,000 d. 600,000 Answer is a Solution: Mugs to be distributed (80% x 250,000 / 10) 20,000...