Name: Bagadiong Angelian T.

Grd & Sec: BSA-2B

Assignment 1
Premium Liability, Warranty Liability

1. R&L Company
Required: Prepare journal entries to record the transactions relating to the premium plan  for the

a. To record the sales

Cash 3,600,000.00
Sales 3,600,000.00
(400,000 x 9)

b. To record the purchase of the premiums

Premiums- ballpoints pen 900,000.00
Cash 900,000.00

c. To record the redemption

For ballpoint pen Cash (8,000 x 5) 40,000.00
Premiums expense (8,000 x 85) 680,000.00
Premiums (8000 x 90)

Ball pen
80000/10 = 8,000 pens distribtuted

Grand Prize
5,000 x 30 = 150,000 grand prize (5,000 cash) distributed

d. To record the liability for the premiums at the current year:

For ballpoint pen: Bottle caps to be redeemed 100,000.00
(400,000 x 25% )
Less: Bottle caps redeemed 80,000.00
20,000.00
Premiums to be distributed 2,000.00
(20,000 / 10)
Estimated Liability 170,000.00
(2,000 x 85)
 Premium Expense 170,000.00
Estimated premiums Liability

Grand Prize
5,000 x 30 = 150,000 grand prize (5,000 cash) distributed
Premiums 150,000.00
Cash 150,000.00

2. Summer Company
Required: Prepare appropriate journal entries for the current year to recognize the cash  rebate p

a. To recognize the cash rebate programs

Rebate expenses 800,000.00
Estimated rebate liability

Rebate coupons issued 20000

Expected to be redeemed 80%
Coupon rebates to be redeemed 16000
Cash Rebate per coupon 50
800,000.00

b. To record the payments to customer

Estimated rebate liability 500,000.00
Cash

3. Berto Company
Required Prepare journal entries from 2020 to 2023

Gross Sales 7,000,000.00 87.50%

Points 1,000,000.00 12.50%
8,000,000.00 100%

Sales 6,125,000.00
Actual Point 875,000.00
Gross Sales Value with Points 7,000,000.00

Journal Entries

Cash 7,000,000.00
Sales 6,125,000.00
Unearned Revenue 875,000.00
2020 Redeemed points 15,000
Total Redeemed point 40,000
Percentage 38%

Revenue to be recognized 328,125.00 (875,000 x 38%)

Unearned Revenue 328,125.00

Sales 328,125.00

2021 Redeemed points-2020 15,000

Redeemed points - 2021 7950
Total Redeemed point 22,950

Total estimated points 42,500

Percentage 54%

Revenue to be recognized 144,375.00

Unearned Revenue 144,375.00

Sales 144,375.00

2022 Redeemed points-2020 15,000

Redeemed points - 2021 7,950
Redeemed points - 2022 2,550
25,500

Total estimated points 42,500

Percentage 60%

Revenue to be recognized 52,500.00

Unearned Revenue 52,500.00

Sales 52,500.00

2023 Redeemed points-2020 15,000

Redeemed points - 2021 7,950
Redeemed points - 2022 2,550
Redeemed points - 2023 15,000
40,500.00
Total estimated points 45,000.00
Percentage 90%

Revenue to be recognized 262,500.00

 Unearned Revenue 350,000.00
Sales 350,000.00

4. Sony Company
Prepare the adjustment of the estimated warranty liability on December 31, 2021.
e premium plan  for the current year.

Premium Expense 30,000.00

Cash 30,000.00

720,000.00
 170,000.00

gnize the cash  rebate program.

800,000.00

500,000.00