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    Audit Liability 05 Chapter 7

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    Ma Teresa B. Cerezo
    Pukaki Company sold 700,000 boxes of puto mix, with each box containing a coupon for a kitchen knife that costs P65 total to redeem. So far only 250,000 coupons have been redeemed, but the estimated redemption rate is 70%, meaning 490,000 coupons will likely be redeemed total. With 240,000 coupons still unredeemed, and each costing P25 to redeem, Pukaki's liability for unredeemed coupons as of December 31, 2010 is P6,000,000.

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    Audit Liability 05 Chapter 7

    Uploaded by

    Ma Teresa B. Cerezo
    1K views1 page
    Pukaki Company sold 700,000 boxes of puto mix, with each box containing a coupon for a kitchen knife that costs P65 total to redeem. So far only 250,000 coupons have been redeemed, but the estimated redemption rate is 70%, meaning 490,000 coupons will likely be redeemed total. With 240,000 coupons still unredeemed, and each costing P25 to redeem, Pukaki's liability for unredeemed coupons as of December 31, 2010 is P6,000,000.

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    Pukaki Company sold 700,000 boxes of puto mix, with each box containing a coupon for a kitchen knife that costs P65 total to redeem. So far only 250,000 coupons have been redeemed, but the estimated redemption rate is 70%, meaning 490,000 coupons will likely be redeemed total. With 240,000 coupons still unredeemed, and each costing P25 to redeem, Pukaki's liability for unredeemed coupons as of December 31, 2010 is P6,000,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    1K views1 page

    Audit Liability 05 Chapter 7

    Uploaded by

    Ma Teresa B. Cerezo
    Pukaki Company sold 700,000 boxes of puto mix, with each box containing a coupon for a kitchen knife that costs P65 total to redeem. So far only 250,000 coupons have been redeemed, but the estimated redemption rate is 70%, meaning 490,000 coupons will likely be redeemed total. With 240,000 coupons still unredeemed, and each costing P25 to redeem, Pukaki's liability for unredeemed coupons as of December 31, 2010 is P6,000,000.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    PROBLEM 7-5

    Premiums
    PUKAKI COMPANY sold 700,000 boxes of “puto mix” under anew sales
    promotional program. Each box contains one coupon, which if
    submitted with P40, entitles the customer to a kitchen knife.
    Pukaki pays P60 per knife and P5 for handling and shipping.
    Pukaki estimates that 70% of the coupons will be redeemed, even
    though only 250,000 coupons had been processed during 2010.
    How much should Pukaki report as liability for unredeemed coupons
    at December 31,2010?
    A. P6,000,000 C. P15,600,000
    B. P9,600,000 D. P12,250,000
    SOLUTION 7-5
    Boxes of “puto mix” sold 700,000
    Redemption rate 70%
    Total coupons redeemable 490,000
    Coupons to be redeemed(490,000-250,000) 240,000
    Net cost per kitchen knife(P65-P40) x25
    Liability for unredeemed coupons P6,000,000
    Answer: A

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