ABC began a gift card program in January 2023 and sold $15,350 of gift cards in January, $17,950 in February, and $20,950 in March 2023 before discontinuing further gift card sales. During 2023, gift card redemptions were $8,700 for the January gift cards sold, $4,650 for the February cards, and $6,300 for the March cards. ABC considers gift cards to be “broken” (a remote probability of redemption) 10 months after sale. What liability for deferred revenue associated with gift card sales would ABC show as of December 31, 2023? a) 6,300 b) 20,950 c) 54,250 d) 14,650

ABC began a gift card program in January 2023 and sold $15,350 of gift cards in January, $17,950 in February, and $20,950 in March 2023 before discontinuing further gift card sales. During 2023, gift card redemptions were $8,700 for the January gift cards sold, $4,650 for the February cards, and $6,300 for the March cards. ABC considers gift cards to be “broken” (a remote probability of redemption) 10 months after sale. What liability for deferred revenue associated with gift card sales would ABC show as of December 31, 2023? a) 6,300 b) 20,950 c) 54,250 d) 14,650

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 6MC

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CircuitTown commenced a gift card program in January 2024 and sold $12,900 of gift cards in January, $19,950 in February, and $19,800 in March 2024 before discontinuing further gift card sales. During 2024, gift card redemptions were $8,400 for the January gift cards sold, $5,700 for the February cards, and $5,550 for the March cards. CircuitTown considers gift cards to be “broken” (not redeemable) 10 months after sale. Required: 1. How much revenue will CircuitTown recognize with respect to March gift card sales during 2024?2. What liability for deferred revenue associated with gift card sales would CircuitTown show as of December 31, 2024?
CircuitTown commenced a gift card program in January 2024 and sold $13,900 of gift cards in January, $18,700 in February, and $20,450 in March 2024 before discontinuing further gift card sales. During 2024, gift card redemptions were $8,500 for the January gift cards sold, $5,100 for the February cards, and $6,050 for the March cards. CircuitTown considers gift cards to be “broken” (not redeemable) 10 months after sale. Required: How much revenue will CircuitTown recognize with respect to January gift card sales during 2024? Prepare journal entries to record the sale of January gift cards, redemption of gift cards (ignore sales tax), and breakage (expiration) of gift cards. How much revenue will CircuitTown recognize with respect to March gift card sales during 2024? What liability for deferred revenue associated with gift card sales would CircuitTown show as of December 31, 2024?
CircuitTown commenced a gift card program in January 2021 and sold $10,000 of gift cards in January, $15,00 in February, and $16,000 in March 2021 before discontinuing further gift card sales. During 2021, gift cardredemptions were $6,000 for the January gift cards sold, $4,500 for the February cards, and $4,000 for the March cards. CircuitTown considers gift cards to be “broken” (not redeemable) 10 months after sale. Required:1. How much revenue will CircuitTown recognize with respect to January gift card sales during 2021?2. Prepare journal entries to record the sale of January gift cards, redemption of gift cards (ignore sales tax), and breakage (expiration) of gift cards.3. How much revenue will CircuitTown recognize with respect to March gift card sales during 2021?4. What liability for deferred revenue associated with gift card sales would CircuitTown show as of December 31, 2021?
CircuitTown commenced a gift card program in January 2021 and sold $10,000 of gift cards in January, $15,000 in February, and $16,000 in March 2021 before discontinuing further gift card sales. During 2021, gift card redemptions were $6,000 for the January gift cards sold, $4,500 for the February cards, and $4,000 for the March cards. CircuitTown considers gift cards to be “broken” (not redeemable) 10 months after sale. Required:1. How much revenue will CircuitTown recognize with respect to January gift card sales during 2021?2. Prepare journal entries to record the sale of January gift cards, redemption of gift cards (ignore sales tax), and breakage (expiration) of gift cards.3. How much revenue will CircuitTown recognize with respect to March gift card sales during 2021?4. What liability for deferred revenue associated with gift card sales would CircuitTown show as of December 31, 2021?
CircuitTown commenced a gift card program in January 2018 and sold $10,000 of gift cards in January, $15,000in February, and $16,000 in March 2018 before discontinuing further gift card sales. During 2018, gift cardredemptions were $6,000 for the January gift cards sold, $4,500 for the February cards, and $4,000 for the Marchcards. CircuitTown considers gift cards to be “broken” (not redeemable) 10 months after sale.Required:1. How much revenue will CircuitTown recognize with respect to January gift card sales during 2018?2. Prepare journal entries to record the sale of January gift cards, redemption of gift cards (ignore sales tax), andbreakage (expiration) of gift cards.3. How much revenue will CircuitTown recognize with respect to March gift card sales during 2018?4. What liability for deferred revenue associated with gift card sales would CircuitTown show as of December31, 2018?
GoodBuy sells gift cards redeemable for GoodBuy products either in store or online. During 2024, GoodBuy sold $1,040,000 of gift cards, and $900,000 of the gift cards were redeemed for products. As of December 31, 2024, $33,000 of the remaining gift cards had passed the date at which GoodBuy concludes that the cards will never be redeemed. How much gift card revenue should GoodBuy recognize in 2024?
Cullumber Bakery began selling gift cards in 2025. Based on industry norms, they expect that 40% of the gift cards will not be redeemed. In 2025, the bakery sold gift cards with a value of $1000. During that period, gift cards with a value of $250 were redeemed. The amount of revenue that Cullumber will recognize in 2025 with regard to the gift cards is
MOA sells gift cards that are redeemable only at its stores. The company's policy is to record the redemption amount as realized. MOA sold P1,800,000 worth of gift certificates in 2019 and redeemed P1,560,000 worth of gift certificates. The value of outstanding gift certificates as of January 1, 2019 is P520,000. The company's gross profit margin is 40%. What is the obligation for outstanding gift cards at the end of the fiscal year on December 31, 2019?
In Lizzie Shoes’ experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. Lizzie Shoes sold gift cards for $18,000 during August 2021. $4,000 of cards were redeemed in September 2021, $3,000 in October, $2,500 in November, and $2,000 in December 2021. In 2022 an additional $1,000 of cards were redeemed in January and $500 in February. How much gift card revenue associated with the August 2021 gift card sales would Lizzie get to recognize in 2021 and 2022?
In Lizzie Shoes’ experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. Lizzie Shoes sold gift cards for $19,150 during August 2021. $3,400 of cards were redeemed in September 2021, $3,610 in October, $2,750 in November, and $2,670 in December 2021. In 2022 an additional $1,850 of cards were redeemed in January and $535 in February.How much gift card revenue associated with the August 2021 gift card sales would Lizzie get to recognize in 2021 and 2022?
In 2015, S began selling S Company gift cards. During 2015, S sold $4,600,000 of these gift cards. During 2015, customers redeemed $2,950,000 of S’s gift cards. There are no expiration dates on S’s gift cards. S estimates that 4% of its gift cards sold will never be redeemed. S operates in jurisdictions where they are not required to remit unredeemed gift card balances to government agencies under unclaimed property laws. S only prepares AJEs every 12-31. Prepare the 2015 entries S made: to reflect gift card sales. to reflect gift card redemptions. to record 12-31’s AJE for estimated gift card breakage income.
Accounting for Gift Cards Assume Ikeo Inc. sold $80,000 of gift cards during the last two weeks of December 2020. No gift cards were redeemed in 2020, while $72,000 of the gift cards were redeemed for store purchases during 2021. On December 31, 2021, Ikeo Inc. calculates the remaining balance of unredeemed gift cards of $8,000 ($80,000 less $72,000). Based on previous experiences, Ikeo estimates gift card breakage to be 5% of total gift card sales. Ikeo uses the proportional method to recognize income on gift card breakage. Required a. Record the sale of gift cards in 2020. b. Record the redemption of gift cards in 2021. c. Record revenue in 2021 due to gift card breakage using the proportional method. Note: Carry all decimals in calculations; round the final answer to the nearest dollar.Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Account Name Dr. Cr. a. Answer…