Solution-What amount should ITSS report as a liability

What amount should ITSS report as a liability

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Reference no: EM132918124

Question - In packages of its products, ITSS Inc. includes $2 coupons that may be presented at retail stores to obtain discounts on other ITSS products. Retailers are reimbursed for the face amount of coupon ($2) plus handling cost of 6 cent for each coupon redeemed. ITSS honours requests for coupon redemption by retailers up to three months after the consumer expiration date printed on the coupon. ITSS issues 500,000 coupons and it estimates that 56% of all coupons issued will eventually be redeemed. Information relating to coupons issued by ITSS during Year 10 (the first year of the promotion) is as follows:

Consumer expiration date 12/31/Year 10

Total payment to retailers as at 12/31/Year 10 $440,000

(1) What amount should ITSS report as a liability for unredeemed coupons at December 31, Year 10?

(2) What amount of coupon expense should ITSS report on its Year 10 income statement?

Reference no: EM132918124

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What amount should ITSS report as a liability

Reference no: EM132918124

Reference no: EM132918124

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