Jollibee Foods Corp. Includes one coupon in each box of Jollibee lunch it sells.

In return for 5 coupons,

customer received a Jollibee toy that the company purchase's for 20 each.

Jollibee Foods Corp. Experience indicates that 60 Percent of the coupons Will be redeemed.

2019 2020

Boxes of Jollibee lunch sold. 150,000. 160,000

Number of Jollibee toy purchased. 15,000. 20,000

Coupons redeemed. 30,000. 40,000

Questions

1.) What is the premium expense for 2019?

2.) What is the premium liablity on December 31,2019?

3.) What is the premium expense for 2020?

4.) What is the premium liability on December 31, 2020

Solutions

1.) Coupons to be redeemed in 2019 (150,000 x 60%) 90,000

Coupons redeemed in 2019. 30,000

Coupons outstanding Dec.31,2019. 60,000

Premium Expense for 2019 (90,000/5 x 30). 540,000

2.) Estimated Liability Dec. 31, 2019 (60,000/5 x 30). 360,000

4.) Coupons to be redeemed in 2019 (160,000 x 60%) 96,000

Coupons redeemed in 2019. 40,000

Coupons outstanding Dec.31,2019. 56,000

Premium Expense for 2019 (96,000/5 x 30). 576,000

5.) Estimated Liability Dec. 31, 2019 (56,000/5 x 30). 336,000

Monreal's Company manufactures a certain product and sells it @200 per unit. A soup bowl is offered to
customers on the 10 wrapper plus a remittance of 15. The bowl costs 60 and 60% of wrapper will be
redeemed.

Data with respect to the premium offer December 31,2020, the following information is available:

Sales 15,000 units @200. 3,000,000

Soup bowl purchased 1,000 unitsy @60. 60,000

Wrapper redeemed. 5,000

Questions

1.) What amount should be reported as premium expense for 2020?

Solutions

Wrappers to be redeemed (15,000 x 60%). 9,000

Less: Wrapper to redeemed. 5,000

Balance. 4,000

Premium expense (9,000/5x 45). 81,000