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Problem:

Roland Company sold 654,400 boxes of pie mix under a new sales promotional program. Each box contains one coupon, which when submitted with $4.20, entitles the customer to a baking pan. Roland pays $6.20 per pan and $0.70 for handling and shipping. Roland estimates that 70% of the coupons will be redeemed, even though only 275,400 coupons had been processed during 2014.

Required:

Question: What amount should Roland report as a liability for unredeemed coupons at December 31, 2014?

Note: Explain all calculation and formulas.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91165605

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