Question

Bananas sells gift cards in $15, $25, and $50 increments. Assume bananas sells $20.8 million in iTunes gift cards in November, and customers redeem $113.8 million of the gift cards in December. What is the ending balance in the Deferred Revenue account? a. 7.4 million b. 8.6 million c. 11.2 million d. 13.5 million

Answer 1

The ending balance in the Deferred Revenue account can be calculated by subtracting the total amount redeemed from the total amount sold. In this case, the ending balance is -$93 million.

The correct option is not given.

Step-by-step explanation:

The ending balance in the Deferred Revenue account can be calculated by subtracting the total amount redeemed from the total amount sold. In this case, $20.8 million was sold in November and $113.8 million was redeemed in December. So, the ending balance would be $20.8 million - $113.8 million, which equals -$93 million.

Since the balance is negative, it means that the company has a deficit in the Deferred Revenue account and needs to recognize this loss.

The correct option is not given.