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Sheridan Company includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Sheridan $3 each. Sheridan estimates that 60 percent of the
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Sheridan Company includes one coupon in each bag of dog food it sells. In return for eight coupons, customers receive a leash. The leashes cost Sheridan $3 each. Sheridan estimates that 60 percent of the coupons will be redeemed. Data for 2020 and 2021 are as follows:

2020 2021
Bags of dog food sold 510000 600000
Leashes purchased 19000 24000
Coupons redeemed 130000 150000
The premium liability at December 31, 2015 is:_____.
a. $22,500.
b. $39,375.
c. $45,000.
d. $84,375.

User Pooja K Bhatt
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7 votes
7 votes

Answer:

Note: The options attached belongs to another question, so the answer is not included

Premium liability at December 31, 2020 = ((510,000*60%) - $130,000) / 8*3

Premium liability at December 31, 2020 = 176,000 / 24

Premium liability at December 31, 2020 = 7,333.33

Premium liability at December 31, 2021 = 7333.33 + ((600000*60%) - 150000) / 8*3

Premium liability at December 31, 2021 = 7333.33 + 360,000 - 150,000

Premium liability at December 31, 2021 = 217,333.33

User Caleigh
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