Use the following information for the next three questions.

Emong Candy Company offers a coffee mug as a premium for every ten 50-cent candy bar wrappers presented by customers together with P1.00. The purchase price of each mug to the company is 90 cents; in addition it costs 60 cents to mail each mug. The results of the premium plan for the years 2008 and 2009 are as follows:

2008 2009

Coffee mugs purchased 480,000 400,000

Candy bars sold 3,750,000 4,500,000

Wrappers redeemed 1,900,000 2,800,000

2008 wrappers expected to be redeemed in 2009

1,300,000

2009 wrappers expected to be redeemed in 2010

1,800,000

5. The premium expense for the year ended December 31, 2009 is

a. P165,000 c. P495,000

b. P230,000 d. P690,000

6. The inventory of premium mugs as of December 31, 2009 is

a. P369,000 c. P423,000

b. P410,000 d. P540,000

7. The estimated liability for premiums as of December 31, 2009 is

a. P 90,000 c. P165,000

b. P162,000 d. P270,000