A Company Offers a Cash Rebate of $1 on Each

Multiple Choice

A company offers a cash rebate of $1 on each $4 package of light bulbs sold during 2007.Historically, 10% of customers mail in the rebate form.During 2007, 4,000,000 packages of light bulbs are sold, and 140,000 $1 rebates are mailed to customers.What is the rebate expense and liability, respectively, shown on the 2007 financial statements dated December 31?

A) $400,000; $400,000
B) $400,000; $260,000
C) $260,000; $260,000
D) $140,000; $260,000