1. The BOSS had mentioned that he simply loved all his kids and so, several years ago, had bought a toy manufacturing company Noiz With Toiz Company [NWT] just so that they could have all the toys they wanted. In early December, 2018, NWT introduced a new toy figure called PenzMan. In order to promote the sales of golf clubs which the company also manufactures, NWT decided to issue one coupon with each golf club purchased.

For $50 and five coupons, it offered its customers one Penman toy which costs NWT $52. Eventually, it expects that 30% of the coupons will be redeemed. During December, 2018, NWT sold 4,600,000 golf clubs. Assume the coupons were valid for one year from the month they were issued and that no coupons were redeemed during December. In its December 31, 2018 balance sheet, what amount should NWT report as the estimated liability for the coupons?

a. $14,352,000.

b. $1,840,000

c. $552,000

d. $47,840,000.

e. None of the above answers.

2. For this Question, assume from above that 8% of the total coupons issued with the sales in December were submitted by customers for redemption during the month. The journal entry to record this redemption would be?