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2. In an effort to increase sales, Blue Razor Blade Company inaugurated a sales promotion campaign on June 30, 2002, whereby Blue placed a coupon

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2. In an effort to increase sales, Blue Razor Blade Company inaugurated a sales promotion campaign on June 30, 2002, whereby Blue placed a coupon in each package of razor blades sold, the coupons being redeemable for a premium. Each premium costs Blue P0.50, and five coupons must be presented by a customer to receive a premium. Blue estimated that only 60% of the coupons issued will be redeemed. For the six months ended December 31, 2002, the following information is available: Packages of razor blades sold Premiums purchased Coupons redeemed 400,000 30,000 100,000 Required: How much is the premium expense in 2002? b. How much is the estimated liability as of December 31, 2002

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