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ACC- MML uses two sales promotion techniques

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Question;MML uses two sales promotion techniques - warranties and premiumwarranties are sold with a one year warranty and is %2 of salespremiums are receive a coupon for each dollar spent and exchange 200 coupons plus $20 for a CD player which cost the company $34 each MML estimates that 60^ of the coupons given to customers will be redeemedTotal sales are $7.2 million $5.4 millon from warranties and $1.8 million from premium warranties cost $164000 during 2011 and 6300 CD players were used and $1.2 million coupons redeemedThe accrual method is used by MML the balances on Jan 1, 2011 wereInventory of premium CD players $39960Estimated Premium Liability $44800EStimated Liabiltiy for warranty $136.00MML is preparing its financial stm for the year ended Dec,eber 31, 2011I need to determine the amounts that will be shown on the 2011 financial statement for the followingA.1. Warranty Expense2. Estimated liability for warranties3. Premium expense4. Inventory of Premium CD players5. Estimated Premium liabilityB Also assume that MML auditor determined that both the one year warranty and the coupods for the CD players were in fact revenue arranagments with mutl deliverable that should be accounted fro under the revenue approach Explain how this would change the way in which these two programs were accounting for in part A

 

Paper#43948 | Written in 18-Jul-2015

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