Premiums Presented below are three independent

situations 1 Ma
Premiums Presented below are three independent situations.1. Mar-quart Stamp Company
records stamp service revenue and provides for the cost of redemptions in the year stamps are
sold to licensees. Mar-quart’s past experience indicates that only 80% of the stamps sold to
licensees will be redeemed. Mar-quart’s liability for stamp redemptions was $13,000,000 at
December 31, 2009. Additional information for 2010 is as follows. Stamp service revenue from
stamps sold to licensees $9,500,000 Cost of redemptions (stamps sold prior to 1/1/10)
6,000,000 If all the stamps sold in 2010 were presented for redemption in 2011, the redemption
cost would be $5,200,000. What amount should Mar-quart report as a liability for stamp
redemptions at December 31, 2010?2. In packages of its products, Wiseman Inc. includes
coupons that may be presented at retail stores to obtain discounts on other Wiseman products.
Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for
handling costs. Wiseman honors requests for coupon redemption by retailers up to 3 months
after the consumer expiration date. Wiseman estimates that 60% of all coupons issued will
ultimately be redeemed. Information relating to coupons issued by Wiseman during 2010 is as
follows.Consumer expiration date 12/31/10Total face amount of coupons issued $850,000Total
payments to retailers as of 12/31/10 330,000What amount should Wiseman report as a liability
for unredeemed coupons at December 31, 2010?3. Newell Company sold 600,000 boxes of pie
mix under a new sales promotional program. Each box contains one coupon, which submitted
with $4.00, entitles the customer to a baking pan. Newell pays $6.00 per pan and $0.50 for
handling and shipping. Newell estimates that 70% of the coupons will be redeemed, even
though only 250,000 coupons had been processed during 2010. What amount should Newell
report as a liability for unredeemed coupons at December 31, 2010?(AICPA adapted)View
Solution:
Premiums Presented below are three independent situations 1 Ma
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