Question

Apple Inc. is the number one online music retailer through its iTunes music store. Apple sells iTunes gift cards in $15, $25, and $50 increments. Assume Apple sells $20.4 million in iTunes gift cards in November, and customers redeem $13.4 million of the gift cards in December. 3. What is the ending balance in the Deferred Revenue account? (Enter your answer in dollars, not in millions. (i.e. 5.5 should be entered as 5,500,000).)

Answer 1

The ending balance in the Deferred Revenue account for Apple Inc. would be $7,000,000 after selling $20.4 million in iTunes gift cards and having $13.4 million redeemed.

Step-by-step explanation:

The student asked about the ending balance in the Deferred Revenue account for Apple Inc. after it sold $20.4 million in iTunes gift cards in November and customers redeemed $13.4 million of the gift cards in December. Deferred revenue, also known as unearned revenue, represents a liability for services or goods which have been sold but not yet delivered or provided.

To calculate the ending balance in the Deferred Revenue account, you subtract the amount redeemed ($13.4 million) from the total amount sold ($20.4 million). Therefore, the ending balance is $20,400,000 (sold) - $13,400,000 (redeemed) = $7,000,000.