During the Year, L&M Leather Goods Sold 1,000,000 Reversible Belts

During the year, L&M Leather Goods sold 1,000,000 reversible belts under a new sales promotional program. Each belt carried one rebate certificate which entitles the customer to a $4.00 cash refund when the rebate is submitted for redemption. L&M estimates that 70% of the rebates will be redeemed. 500,000 rebates had been submitted for redemption during the year. At December 31, L&M should report a liability for unredeemed rebate certificates of:

A) $700,000.
B) $800,000.
C) $1,000,000.
D) $2,800,000.

Correct Answer:

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