Utley Trading Stamp Co If All the Stamps Sold in 2006 Were Presented for the Cost

question 103

Multiple Choice

Utley Trading Stamp Co.records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees.Utley's past experience indicates that only 80% of the stamps sold to licensees will be redeemed.Utley's liability for stamp redemptions was $7,500,000 at December 31, 2005.Additional information for 2006 is as follows: $\begin{array} { l } \text {Stamp service revenue from stamps sold to licensees }&\$5,000,000\\ \text { Cost of redemptions}&3,400,000\\\end{array}$
If all the stamps sold in 2006 were presented for redemption in 2007, the redemption cost would be $2,500,000.What amount should Utley report as a liability for stamp redemptions at December 31, 2006?

• A)$9,100,000.
• B)$6,600,000.
• C)$6,100,000.
• D)$4,100,000.

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Definitions:

Atomized Society

A social condition characterized by a lack of connection and solidarity among individuals, leading to isolation and fragmentation of relationships.

Surveillance Society

A society in which the monitoring and collection of data about individuals is pervasive, often by governments or corporations, for various purposes.

Laissez-Faire Society

A society where transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs, and enforced monopolies.

Social Control

Mechanisms, strategies, and processes that regulate individual and group behavior, aiming to maintain conformity and compliance within a society.