Core Trading Stamp Co

question 124

Multiple Choice

Core Trading Stamp Co. records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. Core's past experience indicates that only 75% of the stamps sold to licensees will be redeemed. Core's liability for stamp redemptions was $5,000,000 at December 31, 2013. Additional information for 2014 is as follows: If all the stamps sold in 2014 were presented for redemption in 2015, the redemption cost would be $3,000,000. What amount should Core report as a liability for stamp redemptions at December 31, 2014?

• A) $8,320,000.
• B) $5,680,000.
• C) $3,930,000.
• D) $4,680,000.

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Definitions:

Sporozoites

Motile infective forms of parasitic protozoa that can enter host cells; they are often associated with the life cycle of malaria-causing Plasmodium.

Nonmotile

Referring to organisms or cells that are incapable of self-movement.

Mycelium

The vegetative body of most fungi and certain protists (water molds); consists of a branched network of hyphae.

Locomotion

The ability of an organism to move from one place to another using its own power.