To increase its sales, PVP Co. included a coupon redeemable for a prize in each package of cereal sold beginning on July 1, 2014. Each prize costs PVP $1.00, and five coupons must be presented to receive a prize. PVP estimated that only 50% of the coupons issued would be redeemed. For the six months ended December 31, 2014 the following information is available:

Show computations for the estimated liability for prize claims outstanding on December 31, 2014.

Packages of cereal sold Prizes purchased 3,000,000 100,000 Coupons redeemed 500,000