During 2020, STU Company sold 500,000 boxes of brownies mix under a new sales promotional program. Each box contains one coupon, which when submitted with P40 entitles the customer a roll of baking sheet paper . ABC pays P50 per pan and P5 for handling and shipping. ABC estimates that 80% of the coupon will be redeemed, even though only 300,000 coupons have been processed during the year. What amount should ABC report as liability for unredeemed coupons as of December 31, 2020?

During 2020, STU Company sold 500,000 boxes of brownies mix under a new sales promotional program. Each box contains one coupon, which when submitted with P40 entitles the customer a roll of baking sheet paper . ABC pays P50 per pan and P5 for handling and shipping. ABC estimates that 80% of the coupon will be redeemed, even though only 300,000 coupons have been processed during the year. What amount should ABC report as liability for unredeemed coupons as of December 31, 2020?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6MC

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