Hulu company includes one coupon in each box of laundry soap it sells. A towel is offered as a premium to customers who send in 10 coupons and a remittance of 20. Data for the premium offer are; 20xx20x1Boxes of soap sold500,000800,000Number of towels purchased (100) per towel20,00025,000coupons redeemed140,000200,000Hulu company experience indicates that only 30% of the coupons will be redeemed.How much is the estimated liability for premiums on December 31 2012? a. 500,000b. 400,000c. 320,000d. 80,000

Estimated liability is defined as the obligation which could be estimated reasonably. In short, it…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Hulu company includes one coupon in each box of laundry soap it sells. A towel is offered as a premium to customers who send in 10 coupons and a remittance of 20. Data for the premium offer are;

	20xx	20x1
Boxes of soap sold	500,000	800,000
Number of towels purchased (100) per towel	20,000	25,000
coupons redeemed	140,000	200,000

Hulu company experience indicates that only 30% of the coupons will be redeemed.

How much is the estimated liability for premiums on December 31 2012?

a. 500,000

b. 400,000

c. 320,000

d. 80,000

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