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 ago
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