Peterson Photoshop sold $1,500 in gift cards on a special promotion on October 1

Question

Peterson Photoshop sold $1,500 in gift cards on a special promotion on October 15, 2018, and sold $2,250 in gift cards on another special promotion on November 15, 2018. Of the cards sold in October, $150 were redeemed in October, $375 in November, and $450 in December. Of the cards sold in November, $225 were redeemed in November and $525 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 12/31/2018, Peterson would show an deferred revenue account for the gift cards with a balance of:

a. 0

b. 1500

c. 2250

d. 2025

Explanation / Answer

November sales = $2250

Less : Redemption

November =225

December =525

2250-750=1500

Option b is correct...

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