Question
Pine Company offers a coffee mug as a premium for every ten P2.50 candy bar wrappers presented by customers together with P10.00. The purchase price
Pine Company offers a coffee mug as a premium for every ten P2.50 candy bar wrappers presented by customers together with P10.00. The purchase price of each mug to the company is P8.00; in addition, it costs P5.00 to mail each mug. The results of the premium plan for the years 2020 and 2021 are as follows (assume all purchases and sales are for cash):
|
| 2020 | 2021 |
| Coffee mugs purchased | 480,000 | 400,000 |
| Candy bars sold | 3,750,000 | 4,500,000 |
| Wrappers redeemed | 1,900,000 | 2,800,000 |
| 2020 wrappers expected to be redeemed in 2021 | 1,300,000 |
|
| 2021 wrappers expected to be redeemed in 2022 |
| 1,800,000 |
What is the amount of premium liability in the December 31, 2021 balance sheet?
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Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield
13th Edition
9780470374948, 470423684, 470374942, 978-0470423684
