2-13 (IAA) Clam Company offers customers a pottery cereal bowl if they send in three boxtops from its products and P10. The entity estimated that 60% of the boxtops will be redeemed. During the current year, the entity sold 675,000 boxes and customers redeemed 330,000 boxtops receiving 110,000 bowls. The cost of each bowl is P25. 1. What is the premium expense for the current year? a. 2,025,000 b. 6,075,000 c. 4,550,000 d. 1,650,000 2. What is the liability for outstanding premiums at year-end? a. 250,000 b. 375,000 c. 625,000 d. 875,000 Problem 2-14 (AICPA Adapted) Baker Company sold consumer products that are packaged in boxes. The entity offered an unbreakable glass in exchange for two box tops and P50 as a promotion during the current year. The cost of the glass was P200. The entity estimated at the end the year that it would be probable that 50% of the box tops will be redeemed. The entity sold 100,000 boxes of the product during the current year and 40,000 box tops were redeemed during the year. What amount should be reported as estimated liability at year-end? -a. 3,000,000 b. 1,500,000 C. d. 750,000 63