E-Z Electronics Is Running a Video Game Promotion

question 83

Multiple Choice

E-Z Electronics is running a video game promotion.For every 10 video games purchased,the customer receives a coupon upon checkout to receive a free game.The coupons expire in one year.E-Z estimates that about half of its video game customers will qualify to receive a coupon.In the past,the store has recognized a gross profit margin of 40% of the selling price on video games.How would the store determine the dollar amount of the adjusting entry to record premium expense and the related contingent liability?

• A)5% of total video game sales
• B)3% of total video game sales
• C)2)5% of total video game sales
• D)2% of total video game sales

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Definitions:

Mismatch Repair

A cellular mechanism that corrects DNA replication errors by removing and replacing incorrectly paired nucleotides.

Incorrectly-Paired Nucleotides

Mismatched pairs of nucleotides that occur during DNA replication or repair, potentially leading to mutations.

Telomeres

The protective caps at the end of chromosomes that prevent the genome from deteriorating or fusing with neighboring chromosomes.

Chromosomes

Thread-like structures located within the nucleus of animal and plant cells, made of protein and a single molecule of deoxyribonucleic acid (DNA).