Funzy cereal includes one coupon in each package of wheatos, Ask an Expert

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Funzy Cereal includes one coupon in each package of Wheatos that it sells and offers a premuim, a toy car, in exchange for 3 coupons. The cars cost Funzy $.75 each. Experience indicates that 40% of the coupons eventually will be redeemed. During the last month of 2011, the first month of the offer, Funzy sold 12 million boxes of Wheatos and 2.4 million of the coupons were redeemed. What amount should Funzy report as a promotional expense on its December 31, 2011, income statement?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M945119

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