Problem 2-6 Mill Company

Coupons to be redeemed (P160,000*60%) P 96,000

Less: Coupons Redeemed (40,000)
Balance P 56,000

1. ANSWER: B
Coupons to be redeemed P 96,000
Divide: Number of Coupons 5
Number of Premiums P 19,200
Multiply: Premium Cost 20
Premium Expense P 384,000

2. ANSWER: B
Coupons to be redeemed P 56,000
Divide: Number of Coupons 5
Number of Premiums P 11,200
Multiply: Premium Cost 20
Amount of Liability P 224,000

Problem 2-7 Day Company

Coupons to be redeemed (P160,000*60%) P 400,000
Less: Coupons Redeemed (3000,000)
Balance P 100,000

3. ANSWER: B
Coupons to be redeemed P 96,000
Multiply: Premium Cost 15
Premium Expense P 6,000,000

4. ANSWER: B
Coupons to be redeemed P 56,000
Multiply: Premium Cost 15
Amount of Liability P 1,500,000

PROBLEM 2-12 Blake Company

ANSWER: B

PROBLEM 3-3 Plumpton Company

1. 2020
Cash P 5,000,000
Sales P 5,000,000

Warranty Expense P600,000

Estimated Warranty Liability P600,000

Estimated Warranty Liability P100,000

Cash P100,000

2021
Cash P 7,000,000
Sales P 7,000,000

Warranty Expense P840,000

Estimated Warranty Liability P840,000
 Estimated Warranty Liability P250,000
Cash P250,000

2. Warranty Expense for 2020 and 2021 P 1,440,000

Actual Warranty Repairs (350,000)
Estimated Warranty Liability P 1,090,000