ACC Tax ch 13 In Lizzie Shoes\' experience, gift cards that have not been redeem

Question

ACC Tax ch 13

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 $23,599 during August of 2016. $2,424 of cards were redeemed in September of 2016, $2,672 in October, $3,212 in November, and $1,848 in December of 2016. In 2017 an additional $2,048 of cards were redeemed in January and $1,173 in February.

How much gift card revenue associated with the August 2016 gift card sales would Lizzie get to recognize in 2016?

Explanation / Answer

Answer:

In 2016 Lizzie would recognize $10,153 of revenue ($2,424+ $2,672 + $3,212 + $1,848). In 2017 Lizziewould recognize the remainder of $13,446 ($23,599 – $10,153), either because gift cards were redeemed(the $2,048 in January and the $1,173 in February) or because they are viewed as expired

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