A company had sales of $1 million.Coupons in the amount of $1 per $10 in sales were given to paying customers.History has shown that 50% of all coupons are redeemed.Which of the following statements is correct?
A) A provision for $50,000 must be recognized.
B) A provision for $100,000 must be recognized.
C) A provision for $1 million must be recognized.
D) No provision is necessary.

Question

Quizplus · Accepted Answer

A provision for $50,000 must be recognized because 50% of the $100,000 worth of coupons are expected to be redeemed.

A Company Had Sales of $1 Million