Question: The Bake Shop sold 7 5 0 , 0 0 0 boxes of cake mix during the year under a new sales promotion program. Each

The Bake Shop sold 750,000 boxes of cake mix during the year under a new sales promotion program. Each box contains one coupon that, submitted with $4.00, entitles the customer to a baking pan. The Bake Shop pays $5.00 per pan and $.50 for handling and shipping. The Bake Shop estimates that 80% of the coupons will be redeemed, even though only 450,000 coupons had been processed during the year. What amount should The Bake Shop report as a liability for unredeemed coupons at year-end?

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