On December 31, 2013, what amount would HU show as the balance in an unearned revenue account for the gift cards?
HU Photoshop sold $1000 in gift cards on a special promotion on October 15, 2013, and sold $1,500 in gift cards on another special promotion on November 15, 2013. Of the cards sold in October, $100 were redeemed in October, $250 in November, and $300 in December. Of the cards sold in November, $150 were redeemed in November and $350 were redeemed in December. HU views the probability of redemption of a gift card as remote if the card has not been redeemed within two months.
Solution
Total Unearned Revenue on 31 Dec. 2013:
Probability of redemption after 2 month is very low so oct. remaining coupon will not be considered.
Total Unearned Revenue on 31 Dec. 2013 = $1,000
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On December 31- 2013- what amount would HU show as the balance in an u.docx
1. On December 31, 2013, what amount would HU show as the balance in an unearned revenue
account for the gift cards?
HU Photoshop sold $1000 in gift cards on a special promotion on October 15, 2013, and sold
$1,500 in gift cards on another special promotion on November 15, 2013. Of the cards sold in
October, $100 were redeemed in October, $250 in November, and $300 in December. Of the
cards sold in November, $150 were redeemed in November and $350 were redeemed in
December. HU views the probability of redemption of a gift card as remote if the card has not
been redeemed within two months.
Solution
Total Unearned Revenue on 31 Dec. 2013:
Probability of redemption after 2 month is very low so oct. remaining coupon will not be
considered.
Total Unearned Revenue on 31 Dec. 2013 = $1,000
October($) November($)
Sales 1,000 1,500
Redeem In Oct 100 -
Redeem In Nov. 250 150
Redeem In Dec 300 350
Balance 0 1,000
