(Premiums) Presented below are three independent situations.

1. Fred McGriff Stamp Company records stamp service revenue and provides for the cost of redemptions in the year stamps are sold to licensees. McGriff’s past experience indicates that only 80% of the stamps sold to licensees will be redeemed. McGriff’s liability for stamp redemptions was $13,000,000 at December 31, 2003. Additional information for 2004 is as follows.

If all the stamps sold in 2004 were presented for redemption in 2005, the redemption cost would be $5,200,000. What amount should McGriff report as a liability for stamp redemptions at December 31, 2004?
2. In packages of its products, Sam Sosa Inc. includes coupons that may be presented at retail stores to obtain discounts on other Sosa products. Retailers are reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. Sosa honors requests for coupon redemption by retailers up to 3 months after the consumer expiration date. Sosa estimates that 60% of all coupons issued will ultimately be redeemed. Information relating to coupons issued by Sosa during 2004 is as follows.

What amount should Sam Sosa report as a liability for unredeemed coupons at December 31, 2004?
3. Bruce Kim 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. Kim pays $6.00 per pan and $0.50 for handling and shipping. Kim estimates that 70% of the coupons will be redeemed, even though only 250,000 coupons had been processed during 2004. What amount should Kim report as a liability for unredeemed coupons at December 31, 2004?

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Stamp service revenue from stamps sold to licensees Cost of redemptions (stamps sold prior to 1/1/04) $9,500,000 6,000,000