Question

In 2021, Holyoak Inc. offers a coupon for $20 off qualifying purchases of its new line of products. Holyoak sold 11,400 of these products during the year. By year-end of 2021, 8,500 coupons had been redeemed and the $20 reduction of purchase price provided to customers. Holyoak's historical experience with such coupons indicates that 85% of customers use the coupon. Holyoak recognizes coupon expense in the period coupons are issued. What is the expense that Holyoak should report for its promotional coupons in its 2021 income statement

Answer 1

Answer: $193,800

Step-by-step explanation:

Based on the information given in the question, the expense that Holyoak should report for its promotional coupons in its 2021 income statement would be calculated as:

= 11400 × 85% × 20

= 11400 × 85/100 × 20

= 11400 × 0.85 × 20

= $193,800