In 2018, Holyoak Inc. offers a coupon for $20 off qualifying purchases of its new line of products. Holyoak sold 10,000 of these products during the year. By year-end of 2018, 7,100 had been redeemed and the $20 reduction of purchase price provided to customers. Holyoak's historical experience with such coupons indicates that 85% of customers use the coupon.
- What is the expense that Holyoak should report for its promotional coupons in its 2018 income statement?

Question

Quizplus · Accepted Answer

This is the expected amount to be claimed from 2018 sales; i.e., $20 × 10,000 × .85.