Q.6

Cyma Cola Company sells boxes of Cola for $10 per box. In addition, Cyma Cola offers its customers a drinking mug in exchange for $1 and 10 Cola box tops. The cost of drinking mug is $3, and the company estimates that customers will redeem 60 percent of the box tops. The premium offer began in June 2019. During 2019 Cyma Cola Company purchased 20,000 Drinking Mugs at $2 for each, and sold 300,000 boxes of Cola for $10 per box, and redeemed 60,000 box tops. Compute Premium Expense in 2019.

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Cyma Cola Company sells boxes of Cola for $10 per box. In addition, Cyma Cola offers its customers a drinking mug in exchange for $1 and 10 Cola box tops. The cost of drinking mug is $3, and the company estimates that customers will redeem 60 percent of the box tops. The premium offer began in June 2019. During 2019 Cyma Cola Company purchased 20,000 Drinking Mugs at $2 for each, and sold 300,000 boxes of Cola for $10 per box, and redeemed 60,000 box tops. Compute Premium Liability in 2019.