97.6k views
3 votes
During 2021, Deluxe Leather Goods issued 797,000 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 75% of the coupons will be redeemed. 420,000 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:

1 Answer

5 votes

Answer:

Deluxe should report a liability for un-redeemed coupons of 799,875

Step-by-step explanation:

Estimated coupons to be redeemed 597,750

(797,000 * 75%)

Less: Coupons redeemed 420,000

Coupons un-redeemed 177,750

X Cost per Coupon 4.50

Liability for un-redeemed Coupons 799,875

User PrzeoR
by
5.5k points