as of december 31 2006 case had paid retailers 25 000 related to these coupons and h 604468

Case Cereal Co. frequently distributes coupons to promote new products. On October 1, 2006, Case mailed 1,000,000 coupons for $.45 off each box of cereal purchased. Case expects 120,000 of these coupons to be redeemed before the December 31, 2006, expiration date. It takes thirty days from the redemption date for Case to receive the coupons from the retailers. Case reimburses the retailers an additional $.05 for each coupon redeemed. As of December 31, 2006, Case had paid retailers $25,000 related to these coupons and had 50,000 coupons on hand that had not been processed for payment. What amount should Case report as a liability for coupons in its December 31, 2006 balance sheet?

1. $35,000
2. $29,000
3. $25,000
4. $22,500