NOLASCO, LEAH MAE G.

BSA - 2 Journal Entries (Chapter 2)

Question 1:
2020

1. Cash 3,600,000
Sales 3,600,000

2. Premiums 390,000
Cash 390,000

3. Cash (5,000 x 10) 50,000

Premium expense (5,000 x 40) 200,000
Premiums (5,000 x 50) 250,000

4. Premium Expense (2,000 x 60) 120,000

Estimated premium liability 120,000

2021
1. Estimated premium liability 120,000
Premium Expense 120,000

Reversing entry.

* Cash 4,200,000
Sales 4,200,000

2. Premiums 580,000
Cash 580,000

3. Cash (9,000 x 10) 90,000

Premium Expense (9,000 x 40) 360,000
Premiums (9,000 x 50) 450,000

4. Premiums Expense (9,000 x 20) 180,000

Cash 180,000

5. Premium Expense (3,000 x 60) 180,000

Estimated premium liability 180,000
Question 2:
2020

1. Cash 2,500,000
Sales 2,500,000

2. Premiums - towels 175,000

Cash 175,000

3. Cash (1,000 x 20) 20,000

Premium Expense 80,000
Premiums - towels (1,000 x 100) 100,000

4. Premiums Expense (1,000 x 5) 5,000

Cash 5,000

5. Premium Expense 51,000

Estimated premium liability (600 x 85) 51,000

2021
1. Estimated premium liability 51,000
Premium Expense 51,000

Cash 3,125,000
Sales 3,125,000

2. Premiums - towels 200,000

Cash 200,000

3. Cash (1,800 x 20) 36,000

Premium Expense 144,000
Premiums - towels (1,800 x 100) 180,000

4. Premium Expense (1,800 x 5) 9,000

Cash 9,000

5. Premium Expense 68,000

Estimated premium liability 68,000

2. Statement of Classification:

Current Asset: 2018 2019

Premiums - towels 75,000 95,000

Current Liability:
Estimated Premium Liability 51,000 68,000

Selling Expense:
Premium Expense 136,000 170,000
Question 3:
2020
Cash (7,000,000/8,000,000 x 7,000,000) 7,000,000
Sales (1,000,000/8,000,000 x 7,000,000) 6,125,000
Unearned revenue - points 875,000

Unearned revenue - points 328,125

Sales 328,125

Points to be redeemed (80% x 50,000) 40,000

Revenue to be recognized in 2020

(15,000/40,000 x 875,000) 328,125

2021
Unearned revenue - points 144,375
Sales 144,375

Cumulative revenue - 12/31/2021

(22,950 / 42,500 x 875,000) 472,500
Revenue recognized in 2020 (328,125)
Revenue to be recognized in 2021 144,375

Points to be redeemed (85% x 50,000) 42,500

2020
Unearned revenue - points 52,500
Sales 52,500

Cumulative revenue - 12/31/2022

(25,500/42,500 x 875,000) 525,000
Revenue recognized in 2021 (472,500)
Revenue to be recognized in 2022 52,500

Points to be redeemed (85% x 50,000) 42,500

Total points redeemed to 12/31/2022
(15,000 + 7,950 + 2,550) 25,500

2023
Unearned revenue - points 350,000
Sales 350,000

Cumulative revenue - 12/31/2023

(40,500/45,000 x 875,000) 787,500
Revenue recognized in 2022 (525,000)
Revenue to be recognized in 2023 262,500

Points to be redeemed (90% x 50,000) 45,000

Total points redeemed to 12/31/2023
(15,000 + 7,950 + 2,550 + 15,000) 40,500