During 2022, Angel Corporation issued 780,000 coupons which entitles the customer to a $5.60 cash refund when the coupon is submitted at the time of any future purchase. Angel estimates that 75% of the coupons will be redeemed. 259,000 coupons had been processed during 2022. Angel recognizes coupon expense in the period coupons are issued. What is the amount of liability Angel should report for unredeemed coupons in its December 31, 2022 balance sheet?
During 2022, Angel Corporation issued 780,000 coupons which entitles the customer to a $5.60 cash refund when the coupon is submitted at the time of any future purchase. Angel estimates that 75% of the coupons will be redeemed. 259,000 coupons had been processed during 2022. Angel recognizes coupon expense in the period coupons are issued. What is the amount of liability Angel should report for unredeemed coupons in its December 31, 2022
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$2,188,200.
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$1,825,600.
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$585,000.
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$2,917,600.
Solution:
amount of liability Angel should report for unredeemed coupons in its December 31, 2022 balance sheet = (Total coupons issued * Cash refund per coupon)*% estimated to be redeemed - Coupon redeemed *Cash refund per coupon
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