Question

In 2021, Holyoak Inc. offers a coupon for $15 off qualifying purchases of its new line of products. Holyoak sold 10,600 of these products during the year. By year-end of 2021, 7,700 coupons had been redeemed and the $15 reduction of purchase price provided to customers. Holyoak's historical experience with such coupons indicates that 80% 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: $127200

Step-by-step explanation:

Promotional codes are simply the alphanumeric strings which are offered by online stores in order to encourage purchases. It is a marketing strategy

Based in the information provided in the question, the expense that Holyoak should report for its promotional coupons in its 2021 income statement will.be calculated as:

= $10,600 × 80% × $15

= $10,600 × 0.8 × $15

= $127200