Sept 11, 2020 Premiums Liability:

Prob 1:221 Product: P300 = 1 wrapper

Power bank [freebies] = 5 wrappers + P10
Accounts Payable 1,250,000 50 pesos = powerbank
Unearned Revenue 250,000 Estimate 60% will be redeemed

Notes Payable 1,000,000 Sales 10,000 units at 300 each 3,000,000

Powerbank 2,000 units at 50 each 100,000
Customer’s Account 200,000 Wrappers redeemed 4,000
[Normal credit balance]
Actual Wrappers redeemed 4,000/5 =800 x 40 = 32,000

Required: 50-10 =40 [net] sa powerbank

Answer: 3,700,000 6,000 unites will be redeemed

Prob 2: How much is PREMIUM EXPENSE 2020

“if silent” = Non-current 6,000/ 5 wrappers = 1,200 units of powerbank
Claim: Contingent Liability 1,200 x 40 = 48,000

Answer: 14,100,000 How much is ESTIMATED PREMIUM LIABILITY 2020

I minus lang ang di naibigay
48,000 – 32,000 = 16, 000
Prob 3:
a. Kasama Prob 2:
b. Hinde
c. Kasama 160,000 x 60% =96,000 / 5 wrappers = 19,200 units of
d. Kasama premium
e. Kasama  Estimated
f. Kasama
g. Kasama Premium expense
h. Kasama ang 1M pag babayaran ng 2021. Pero
since October 2026 siya bayaran, so di siya 19,200x 20 = 384,000
kasama. Kasama lang ang INTEREST.
How much is the interest? Formula:
150,000 [5M x .12 x 3/12] Total sales x estimate of company / coupons required
i. Kasama X cost of premium =premium expense

Answer: Premium Liability

8,100,000 40,000/5 =8,000 x 20 =160,000
384,000 - 160,000 = 224,000
Prob 4:
a. Kasama ang 600k Formula:
b. Kasama Premium expense – premium na nabigay nila = liability
c. Kasama estimated premium liability
d. Kasama
e. Di kasama
f. Di Nangyari before the reporting period.

Answer:2,450,000
Warranty: Problem 2: Pink company

1,000 units of TV at P9,000 each EWE

Under warranty for year. 40,000 350,000
310,000
Estimate of company from past experience, the
warranty cost is probably 500 per unit. Formula: WE – ACTUAL = EWE

60% of the units sold will be returned for repair. 2,000,000 – ACTUAL = [40,000]
The entity incurs 180,000 for repairs during the year. 2,000,000 – 2,040,000 = [40,000]

Warranty Expense
1,000 units x 60% x 500 = 300,000

Warranty expense 300,000

Estimated WE 300,000

Formula: Number of units sold x estimated % to be

repaired x repair cost – warranty cost = warranty
expense

Estimated Warranty Liability

Formula: Warranty expense – Actual expense =

estimated liability

300,000 – 180,000 = 120,000

Estimated WE 180,000
Cash 180,000

Problem 2: Hannah company

Warranty expense = 1,900,000

Estimated warranty expense = [increased during the
year] 200,000

Formula: EWE = WE – INCURRED EXPENSE FOR THE

YEAR

1,900,000 – Incurred = 200,000

1,900,000 –1,700,000= 200,000