MC Qu. 45 LO 13-03 Peterson Photoshop sold... Peterson Photoshop sold $1,900 in
ID: 2502090 • Letter: M
Question
MC Qu. 45 LO 13-03 Peterson Photoshop sold... Peterson Photoshop sold $1,900 in gift cards on a special promotion on October 15, 2013, and sold $2,850 in gift cards on another special promotion on November 15, 2013. Of the cards sold in October, $190 were redeemed in October, $475 in November, and $570 in December. Of the cards sold in November, $285 were redeemed in November and $665 were redeemed in December. Peterson views the probability of redemption of a gift card as remote if the card has not been redeemed within two months. At 12/31/2013, Peterson would show an unearned revenue account for the gift cards with a balance of: $2,850 $2,565 $0 $1,900
Explanation / Answer
As the company thinks the probability of redemption of a gift card as remote if the card has not been redeemed within two months but still the card can be redeemed in next few months.Because the company thinks that the probability of redemption of a gift card as remote if the card has not been redeemed within two months.But this is not the expiration date this is just an estimations So unearned revenue at 12/31/2013
Total unearned in October & November-Toatla value redeemed.
$1900+$2850-$190-$475-$570-285-$665=$2565
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