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Calculate aaa estimated liability for premium claims

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Reference no: EM133070532

Question - AAA kicks off a sales promotion on August 31, 2019. AAA included a redeemable coupon on each can of soup sold. Five coupons must be presented to receive a premium that costs AAA $2 each. AAA estimates that 70% of the coupons will be redeemed. Information available at December 31, 2019 is as follows:

Cans of soup sold: 1,500,000

Premiums purchased: 200,000

Coupons redeemed during 2019: 600,000

Calculate AAA's estimated liability for premium claims, and make an adjustment journal entry on December 31, 2019. Show your calculations clearly.

Reference no: EM133070532

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