A Cereal Company Issues Coupons That Can Be Exchanged for Boxes

question 46

Multiple Choice

A cereal company issues coupons that can be exchanged for boxes of cereal.It issues two million coupons that promise the retailer who redeems the coupons $1 per coupon.The probability of redemption of any one coupon is 10%. What is the amount of the liability that the company recognizes?

• A)$2,000
• B)$20,000
• C)$100,000
• D)$200,000
• E)$2,000,000

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Definitions:

Recklessly

Behaving with a lack of concern for the risk or negative consequences of one's actions, often leading to harm or damage.

Misrepresentation

A false statement of fact made by one party to another, which may induce the other party to enter into a contract.

Memory Capacity

The amount of information that an individual's memory can retain over a period of time.

Equitable Remedy

A court-ordered remedy tailored to address a particular harm or legal violation, including injunctions and specific performance, emphasizing fairness over monetary compensation.