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How much should be reported as premium expense

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Question - Lancer Company inaugurated a promotional campaign on January 2, 2014 to promote the stability of their product. Lancer company placed a coupon redeemable for a premium in each package of napkin sold at P200. Each premium costs P25 and 10 coupons must be presented by a customer to receive a premium. Lancer estimated that only 70% of the coupons issued would be redeemed. For the 6 months ended July 31,2020, the following transactions occurred:

Packages of napkin sold P120,000

Premium purchased 30,000

Coupons redeemed 54,000

Required - How much should be reported as PREMIUM EXPENSE and ESTIMATED LIABILITY for coupons on the fiscal year ended July 31, 2020?

Reference no: EM132946109

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