Milner Frosted Flakes Company Offers Its Customers a Pottery Cereal

Multiple Choice

Milner Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 3 boxtops from Milner Frosted Flakes boxes and $1.00.The company estimates that 60% of the boxtops will be redeemed.In 2007, the company sold 675,000 boxes of Frosted Flakes and customers redeemed 330,000 boxtops receiving 110,000 bowls.If the bowls cost Milner Company $2.50 each, how much liability for outstanding premiums should be recorded at the end of 2007?

A) $25,000
B) $37,500
C) $62,500
D) $87,500