In 2021, Holyoak, Inc. offers a coupon for $20 off qualifying purchases of its new line of products. Holyoak sold 10,000 of these products during the year. By the end of 2021, 7,100 coupons had been redeemed and the $20 reduction of the purchase price provided to customers. Holyoak's historical experience with such coupons indicates that 85% of customers use the coupon. Holyoak recognizes coupon expense in the period coupons are issued. What's the coupon promotion liability that Holyoak should report in its December 31, 2021, balance sheet?
Question 5 options:
A)
$20,000.
B)
$28,000.
C)
$19,000.
D)
$18,000.
Answer & Explanation
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