Funzy Cereal Includes One Coupon in Each Package of Wheatos

question 119

Multiple Choice

Funzy Cereal includes one coupon in each package of Wheatos that it sells and offers a toy car in exchange for $1.00 and three coupons. The cars cost Funzy $1.50 each. Experience indicates that 40% of the coupons eventually will be redeemed. During the last month of 2013, the first month of the offer, Funzy sold 12 million boxes of Wheatos and 2.4 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)$400,000.
• C)$800,000.
• D)$1,200,000.

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Definitions:

Yalta Accords

Agreements made during the 1945 Yalta Conference by the Allied powers, outlining the post-World War II reorganization of Europe.

Manchukuo

A puppet state in Northeast China and Inner Mongolia, established by Japan in 1932 and lasting until the end of World War II. It was part of Japan's imperialist expansion and occupation.

Pentagon

The United States Department of Defense's headquarters, a large office building near Washington, D.C., known for its distinctive pentagonal shape.