As Part of a Promotion Campaign,Funzy Cereal Includes One Coupon

question 110

Multiple Choice

As part of a promotion campaign,Funzy 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 Funzy $1.50 each.Experience indicates that 4% of the coupons eventually will be redeemed.During the last month of 2013,the first month of the offer,12 million coupons were distributed and 240,000 million of the coupons were redeemed.What amount should Funzy report as a promotional expense for coupons on its December 31,2013,income statement?

• A)$ 0.
• B)$ 40,000.
• C)$ 80,000.
• D)$120,000.

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Definitions:

Certificate of Limited Partnership

A legal document filed with a state governmental body to form a limited partnership, outlining the rights and obligations of each partner.

Secretary of State

A high-ranking official in a state government responsible for maintaining public records and documents, among other duties, varying by country.

Limited Partner

An investor in a partnership who has limited liability to the extent of the amount of their investment and does not participate in the day-to-day management of the business.

Fiduciary

A person or organization that acts on behalf of another person or persons to manage assets, exhibiting a high standard of care, loyalty, and honesty.