Question

During 2021, Deluxe Leather Goods issued 838,000 coupons which entitles the customer to a $4.50 cash refund when the coupon is submitted at the time of any future purchase. Deluxe estimates that 73% of the coupons will be redeemed. 262,000 coupons had been processed during 2021. Deluxe recognizes coupon expense in the period coupons are issued. At December 31, 2021, Deluxe should report a liability for unredeemed coupons of:_______

a. $1,828,605.
b. $2,575,500.
c. $1,309,476.
d. $607,760.

Answer 1

check the explanation

Step-by-step explanation:

the step by step calculation to the question above can be seen below:

Estimated coupons to be redeemed 611740 =838000*73%

Less: Coupons redeemed 262000

Coupons unredeemed 349740

X Cost per Coupon 4.50

Liability for unredeemed Coupons 1573830