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A cereal company issues coupons that can be exchanged for boxes of cereal. It issues...

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Accounting

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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