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Premiums and Warranty
Premiums and Warranty
2. What is the estimated liability for premium claims outstanding on December 31, 2020?
a. 169,000
b. 224,000
c. 288,000
d. 384,000
What amount should be reported as liability for unredeemed coupons on December 31, 2020?
a. 1,000,000
b. 1,500,000
c. 3,000,000
d. 5,000,000
Units
5,500
4,000
Sales of product Basketball purchased
Basketball distributed
What is the amount of year-end estimated liability associated with this promotion?
a 4,125,000
b. 1,500,000
c. 3,000,000
d. 4,500,000
On December 31, 2020, the entity had paid retailers P250,000 related to these coupons and had 5,000 coupons on hand
that had not been processed for payment.
What amount should be reported as liability for coupons on December 31, 2020?
a. 350,000
b. 290,000
c. 250,000
d. 225,000
a. 600,000
b. 180,000
c. 462,000
d. 198,000
2. What amount should be reported as liability for unredeemed coupons on December 31, 2020?
a. 308,000
b. 200,000
C. 242,000
d. 0
a. 198,000
b. 396,000
c. 528,000
d. 660,000
What amount should be reported as liability for unredeemed coupons on December 31, 2020?
a. 970,000
b. 915,000
c. 795,000
d. 0
What amount should be reported as rebate expense for the current year?
a. 142,000
b. 152,000
c. 170,000
d. 200,000
2. The accounting concept that requires recognition of a liability for customer premium offer is AHD
a. Time period
b. Prudence
c. Historical cost
d. Matching principle
3. Accounting for cost of incentive program for frequent customer purchases involves
a. Recording an expense and a liability each period.
b. Recording a liability and a reduction of revenue each period.
c. Recording an expense and an asset reduction each period.
d. Recording an expense and revenue each period.
Mile Company sells washing machines that carry a three-year warranty against manufacturer's defects. Based on entity
experience, warranty costs are estimated at P300 per machine. During the current year, the entity sold 2,400 washing
machines and paid warranty costs of P170,000.
1. What amount should be reported as warranty expense?
a. 170,000
b. 240,000
c. 550,000
d. 720,000
2. On June 30, 2020, what amount should be reported as estimated warranty liability?
a. 1,600,000
b. 3,300,000
c. 1,700,000
d. 900,000
3. Which of the following best describes the expense as incurred approach of accounting for warranty cost?
a. Expensed based on estimate in year of sale
b. Expensed when liability is accrued
c. Expensed when warranty claims are certain
d. Expensed when incurred
5. Which of the following is a characteristic of the accrual of warranty but not the sale of warranty?
a. Warranty liability
b. Warranty expense
c. Unearned warranty revenue
d. Warranty revenue