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In 2021, Holyoak Inc. offers a coupon for $20 off qualifying purchases of its new line of products. Holyoak sold 11,400 of these products during the year. By year-end of 2021, 8,500 coupons had been redeemed and the $20 reduction of 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 is the expense that Holyoak should report for its promotional coupons in its 2021 income statement?

Multiple Choice

$181,400.
$228,000.
$193,800.
$170,000.

Respuesta :

Answer:

Amount reported = $193,800

so correct option is c. $193,800

Explanation:

given data

coupon = $20

sold = 11,400

use coupon = 85%

redeemed = 8500

reduction = 20

to find out

report for its promotional coupons in its 2021 income statement

solution

we calculate here Amount that reported for promotional coupons 2021  in income statement  is express as

Amount reported = sold × use coupon × reduction

Amount reported =  11400 × 85% × 20

Amount reported = $193,800

so correct option is c. $193,800

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