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Free Products Discount Coupons: Problem 2-19

1) The document contains financial information for 2021 and 2022 related to boxes sold, coupons redeemed, premium expenses, estimated premium liabilities, and other related figures. 2) It also includes data on free products, discount coupons, rebate coupons, and loyalty points programs, including sales, costs, redemptions, and revenue calculations. 3) The information is presented to allocate transaction prices and deferred revenues between products and coupons/points based on standalone selling prices and redemption rates.

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Nickey Dickey
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195 views7 pages

Free Products Discount Coupons: Problem 2-19

1) The document contains financial information for 2021 and 2022 related to boxes sold, coupons redeemed, premium expenses, estimated premium liabilities, and other related figures. 2) It also includes data on free products, discount coupons, rebate coupons, and loyalty points programs, including sales, costs, redemptions, and revenue calculations. 3) The information is presented to allocate transaction prices and deferred revenues between products and coupons/points based on standalone selling prices and redemption rates.

Uploaded by

Nickey Dickey
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Problem 2-19

2021 2022
Boxes sold 100,000 2,500,000
Number of towels purchased P50 50,000 80,000
Coupons redeemed 40,000 700,000

Cost 200
Remittance 50
Distribution cost
Expected redemption 50%
Returned 2

2021
Boxes sold 100,000
Expected redemption 50%
To be redeemed 50,000
Returned 25,000
150
Premium expense 3,750,000

To be redeemed 50,000
Redeemed 40,000
Outstanding 10,000
To be distributed 5,000
Estimated premium liability 750,000
2022
Boxes sold 2,500,000
Expected redemption 50%
To be redeemed 1,250,000
Returned 2
625,000
Premium expense 93,750,000

To be redeemed 1,250,000
Redeemed 700,000
Outstanding 550,000
To be distributed 275,000
Estimated premium liability - 12/2021 41,250,000
Estimated premium liability - 2022 42,000,000

Problem 2-5
Free products Discount coupons
Product sold 30,000 Product sold
Cost 200 Cost
TOTAL 6,000,000 TOTAL
Expected redemption 75% Average future price
Required set 3 # of discount
Additional free product 6,000 Discount (%)
Expected redemption

# of additional product 10,000 Average price of future purchases


Actual selling price 200 # of discount
Selling price of free products 2,000,000 Total of future purchases
Expected redemption 75% Percentage of discount
Stand-alone selling price 1,500,000 TOTAL
Expected redemption
Stand-alone selling price

Allocation of transaction price

Stand-alone Fraction Allocated


Product sold 6,000,000 4/5 4,800,000 Product sold
Coupons 1,500,000 1/5 1,200,000 Coupons
7,500,000 6,000,000

Stand-along selling price 1,200,000 Total future purchases

Coupons redeemed 720,000 Discount


Deferred revenue - Dec. 31,2022 480,000 Net price
Expected redemption
Cash received from customers
count coupons Rebate coupons
5,400,000 Products sold
Cost
5,400,000 TOTAL
age future price 5,000 Discount per coupon
500 Expected redemption
30% Reimbursement
cted redemption 80%

age price of future purchases 5,000 # of products sold


500 # of discounts
of future purchases 2,500,000 TOTAL
entage of discount 30% Expected redemption
750,000 Stand-alone selling price
cted redemption 80%
d-alone selling price 600,000

Stand-alone Fraction Allocated


5,400,000.00 0.9 4,860,000.00 Product sold
600,000 0.1 540,000.00 Coupons
6,000,000.00 5,400,000.00

future purchases 2,500,000


Rebate liability -
750,000 Dec.31,2021
1,750,000
cted redemption 80%
received from customers 1,400,000

Sales revenue 1,940,000.00


Points
40,000 Product sold 6,800,000
187.5 Cost
7,500,000 TOTAL 6,800,000
50 Points earned 60,000
75% SASP of points 20
500,000

Stand-alone
Product sales 6,800,000
40,000 Points 1,200,000
50 8,000,000
2,000,000
75% Points - allocated 1,020,000
1,500,000 Points will be redeemed - 2021 28,800
Points will be redeemed - 2022 9,000
Points redeemed in 2021 28,800
Points redeemed in 2022 9,000
Points redeemed in 2023 900
TOTAL POINTS REDEEMED 9,000
Stand-alone Fraction Allocated Points redeemed (%) 90%
7,500,000.00 5/6 6,250,000.00
1,500,000 1/6 1,250,000.00 Revenue - 2021 489,600
9,000,000.00 7,500,000.00
2022
Points redeemed 54,000

750,000.00 2021 28,800


2022 9,000
TOTAL 37,800

Cumulative Revenue - 2023 714,000


Revenue - 2022 489,600
Revenue - 2023 224,400
Fraction Allocated
17/20 5,780,000
3/20 1,020,000
6,800,000

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