Question
In: Accounting
Albertson Corporation began a special promotion in July 2018 in an attempt to increase sales. A...
Albertson Corporation began a special promotion in July 2018 in
an attempt to increase sales. A coupon was provided at various
grocery stores upon checkout. Customers could send in five coupons
to receive $3.25. Albertson's management estimated that 70% of the
coupons would be redeemed. For the six months ended December 31,
2018, the following information is available:
| Coupons distributed | 2,500,000 |
| Coupons redeemed | 565,000 |
Required:
What is the estimated liability associated with the coupons at
December 31, 2018?
Solutions
Expert Solution
| CALCULATION OF THE ESTIMATED LIABILITY OF COUPONS AT THE DECEMBER 31,2018 | |||
| Coupons Distributed = | 25,00,000 | ||
| Estimated coupons redemmed = 70% = | 17,50,000 | ||
| Less: Coupons Redeemed | 5,65,000 | ||
| Balance estimated coupon do be redeemed = | 11,85,000 | ||
| Against five coupon we receive $ 3.25 | |||
| So against 11,85,000 coupons = (11,85,000 /5 ) X $ 3.25 = | $ 7,70,250 | ||
| Answer = Esimated liability = $ 770,250 | |||
ekkarill92 answered 1 year agoRelated Solutions
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