The following are three independent situations.

1. Hairston Rewards Inc. provides rewards services to licensees. Hairston records service revenue related to rewards (granted as reward vouchers, which can be redeemed at a variety of retailers) and recognizes the cost of redemptions in the year vouchers are sold to licensees. Hairston’s past experience indicates that only 80% of the vouchers sold to licensees will be redeemed. Hairston’s liability for stamp redemptions was $13,000,000 at December 31, 2024. Additional information for 2025 is as follows.

If all the vouchers sold in 2025 were presented for redemption in 2026, the redemption cost would be $5,200,000. What amount should Hairston report as a liability for voucher redemptions at December 31, 2025?

2. In packages of its products, Burnitz Inc. includes coupons that may be presented at retail stores to obtain discounts on other Burnitz products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. Burnitz honors requests for coupon redemption by retailers up to 3 months after the consumer expiration date. Burnitz estimates that 60% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by Burnitz during 2025 is as follows.

What amount should Burnitz report as a liability for unredeemed coupons at December 31, 2025?

3. Roland Company sold 700,000 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. Roland pays $6.00 per pan and $0.50 for handling and shipping. Roland estimates that 70% of the coupons will be redeemed, even though only 250,000 coupons had been processed during 2025. What amount should Roland report as a liability for unredeemed coupons at December 31, 2025?

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Service revenue from vouchers sold to licensees Cost of redemptions (vouchers sold prior to 1/1/25) $9,500,000 6,000,000