In an effort to increase sales, Sharpy Razor Blade Company inaugurated a sales promotion campaign on June 30, 2014, whereby Sharpy placed a coupon in each package of razor blades sold, the coupons being redeemable for a premium. Each premium costs Sharpy $0.75, and five coupons must be presented by a customer to receive a premium. Sharpy estimated that only 60 percent of the coupons issued will
be redeemed. For the six months ended December 31 . 2014, the following information is available: Packages of razor blades sold ......................... 400,000 Premiums purchased .................................... 30,000 Coupons redeemed ...................................... 100,000 What is the estimated liability for premium claims outstanding at December 31 . 2014?
a. $15,000
b. $20,000
c. $21,000
d. $22,500
C
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