Use the Following Information for Questions

Multiple Choice

Use the following information for questions.
Mott Co.includes one coupon in each bag of dog food it sells.In return for eight coupons, customers receive a leash.The leashes cost Mott $2.00 each.Mott estimates that 40 percent of the coupons will be redeemed.Data for 2010 and 2011 are as follows:
-The estimated premium liability at December 31, 2010 is

A) $7,500.
B) $10,000.
C) $17,500.
D) $20,000.