During 2013, Deluxe Leather Goods sold 800,000 reversible belts under a new sales promotional program. Each belt carried one coupon, which entitles the customer to a $5.00 cash rebate. Deluxe estimates that 70% of the coupons will be redeemed, even though only 350,000 coupons had been processed during 2013. At December 31, 2013, Deluxe should report a liability for unredeemed coupons of:

Question

Quizplus · Accepted Answer

Deluxe expects 70% of 800,000 coupons to be redeemed, which is 560,000 coupons. Since 350,000 have already been redeemed, 210,000 are still expected to be redeemed. At $5 per coupon, the liability is 210,000 x $5 = $1,050,000.

During 2013, Deluxe Leather Goods Sold 800,000 Reversible Belts Under