Excellence, Inc., places a coupon in each box of its product. Customers may send in ten coupons and $2.50, and the company will send them a CD. Sufficient CDs were purchased at $6 a piece to meet the expected demand. A certain number of boxes of product were sold in 2016. It was estimated that a total of 5% of the coupons will be redeemed. In 2016, 18,000 coupons were redeemed. Mailing costs were $0.75 per CD. At December 31, 2016, the following adjusting entry was made to record the estimated liability for premium outstanding:
Premium Expense $\quad $ $\quad $25,500
Estimated Premium Claims Outstanding $\quad $ $\quad $25,500
Required:
Compute the number of boxes of product sold by Excellence in 2016.

Question

Excellence, Inc., places a coupon in each box of its product. Customers may send in ten coupons and $2.50, and the company will send them a CD. Sufficient CDs were purchased at $6 a piece to meet the expected demand. A certain number of boxes of product were sold in 2016. It was estimated that a total of 5% of the coupons will be redeemed. In 2016, 18,000 coupons were redeemed. Mailing costs were $0.75 per CD. At December 31, 2016, the following adjusting entry was made to record the estimated liability for premium outstanding:
Premium Expense  $\quad $ $\quad $25,500
Estimated Premium Claims Outstanding  $\quad $ $\quad $25,500
Required:
Compute the number of boxes of product sold by Excellence in 2016.

Quizplus · Accepted Answer

The Answer of Excellence, Inc., places a coupon in each box of its product. Customers may send in ten coupons and $2.50, and the company will send them a CD. Sufficient CDs were purchased at $6 a piece to meet the expected demand. A certain number of boxes of product were sold in 2016. It was estimated that a total of 5% of the coupons will be redeemed. In 2016, 18,000 coupons were redeemed. Mailing costs were $0.75 per CD. At December 31, 2016, the following adjusting entry was made to record the estimated liability for premium outstanding:
Premium Expense  $\quad $ $\quad $25,500
Estimated Premium Claims Outstanding  $\quad $ $\quad $25,500
Required:
Compute the number of boxes of product sold by Excellence in 2016.

Excellence, Inc \quad \quad 25,500 Estimated Premium Claims Outstanding \quad

Excellence, Inc $\quad$ $\quad$ 25,500
Estimated Premium Claims Outstanding $\quad$