The Salty Chip Company Includes One Coupon Having No Expiration

question 125

Multiple Choice

The Salty Chip Company includes one coupon having no expiration date with its deluxe snack pack. Upon return of 10 coupons, Salty Chip will send a silver chip clip, which costs Salty Chip $1.50 each. Past experience indicates that 30% of coupons issued will be redeemed. Salty Chip began this promotion in 2015 and sold 1,000,000 deluxe snack packs. During 2015, 90,000 coupons were received and 9,000 chip clips were distributed to customers. The December 31, 2015 balance sheet should include a liability for coupons outstanding of

• A) $18,000.
• B) $180,000.
• C) $31,500.
• D) $50,000.

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Definitions:

Stockholders' Equity

Ownership interest represented by what’s left of a corporation’s assets once obligations are cleared.

Earnings Per Share

A financial metric indicating the portion of a company’s profit allocated to each outstanding share of common stock, providing insight into the company's profitability.

Average Market Price

The mean price at which a commodity or security is traded over a certain period, reflecting buyers' and sellers' consensus value.

Treasury Stock

Shares that were once a part of the outstanding shares but were bought back by the issuing company, reducing the amount of outstanding stock on the open market.