Pryor Frosted Flakes Company Offers Its Customers a Pottery Cereal

Multiple Choice

Pryor Frosted Flakes Company offers its customers a pottery cereal bowl if they send in 4 boxtops from Pryor Frosted Flakes boxes and $1.00.The company estimates that 60% of the boxtops will be redeemed.In 2007, the company sold 500,000 boxes of Frosted Flakes and customers redeemed 220,000 boxtops receiving 55,000 bowls.If the bowls cost Pryor Company $2.50 each, how much liability for outstanding premiums should be recorded at the end of 2007?

A) $20,000
B) $30,000
C) $50,000
D) $70,000