Captain Cook Cereal Includes One Coupon in Each Package of Granola

question 39

Multiple Choice

Captain Cook Cereal includes one coupon in each package of Granola that it sells and offers a puzzle in exchange for $2.00 and three coupons. The puzzles cost Captain Cook $3.50 each. Experience indicates that 20% of the coupons eventually will be redeemed. During the last month of 2013, the first month of the offer, Captain Cook sold 6 million boxes of Granola and 900,000 of the coupons were redeemed. What amount should Captain Cook report as a liability for coupons on its December 31, 2013, balance sheet?

• A)$0.
• B)$150,000.
• C)$300,000.
• D)$450,000.

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Definitions:

Cash Manager

is a professional responsible for overseeing and managing a company’s cash flow, ensuring there are sufficient funds available to meet the day-to-day operations.

Short-Term Investment

Investments that are made to hold for a short period, usually less than one year, with the aim of selling for a profit in the near term.