As part of a promotion campaign, Lime Cereal includes one coupon in each issue of various national magazines and offers a toy car in exchange for $1.00 and three coupons. The cars cost Lime $1.50 each. Experience indicates that 4% of the coupons eventually will be redeemed. During the last month of 2021, the first month of the offer, 12 million coupons were distributed and 240,000 million of the coupons were redeemed. Lime recognizes coupon promotion expense in the period coupons are issued. What amount should Lime report as coupon promotion expense on its December 31, 2021, income statement? A. $0. B. $80,000. C. $40,000. D. $12
As part of a promotion campaign, Lime Cereal includes one coupon in each issue of various national magazines and offers a toy car in exchange for $1.00 and three coupons. The cars cost Lime $1.50 each. Experience indicates that 4% of the coupons eventually will be redeemed. During the last month of 2021, the first month of the offer, 12 million coupons were distributed and 240,000 million of the coupons were redeemed. Lime recognizes coupon promotion expense in the period coupons are issued. What amount should Lime report as coupon promotion expense on its December 31, 2021, income statement? A. $0. B. $80,000. C. $40,000. D. $12
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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As part of a promotion campaign, Lime Cereal includes one coupon in each issue of various national magazines and offers a toy car in exchange for $1.00 and three coupons. The cars cost Lime $1.50 each. Experience indicates that 4% of the coupons eventually will be redeemed. During the last month of 2021, the first month of the offer, 12 million coupons were distributed and 240,000 million of the coupons were redeemed. Lime recognizes coupon promotion expense in the period coupons are issued. What amount should Lime report as coupon promotion expense on its December 31, 2021, income statement?
A. $0.
B. $80,000.
C. $40,000.
D. $120,000
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