Exhibit 13-1 the Jung Company Includes a Premium in Each

Multiple Choice

Exhibit 13-1 The Jung Company includes a premium in each box of its cereal.For four premiums plus $2.00, customers are entitled to a plastic doll that costs Jung $4.50 each.Jung expects 60% of the premiums to be redeemed.In 2010, Jung sold 500, 000 boxes of cereal and distributed 25, 000 dolls.
-
Refer to Exhibit 13-1.What is Jung's estimated liability for unredeemed premiums on December 31, 2010?

A) $125, 000
B) $187, 500
C) $225, 000
D) $337, 500