Question

peterson photoshop sold $1,200 in gift cards on a special promotion on october 15, 2021, and sold $1,800 in gift cards on another special promotion on november 15, 2021. of the cards sold in october, $120 were redeemed in october, $300 in november, and $360 in december. of the gift cards sold in november, $180 were redeemed in november and $420 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 12/31/2021, peterson would show a deferred revenue account for the gift cards with a balance of:

Answer 1

The balance in Peterson Photoshop's deferred revenue account for the gift cards as of December 31, 2021, is $1,620, which is the sum of the unredeemed gift cards from both the October and November promotions.

Step-by-step explanation:

The balance in Peterson Photoshop's deferred revenue account for the gift cards as of December 31, 2021, can be calculated by subtracting the total redeemed gift cards from the total amount sold in the given promotions. From the October promotion, $1,200 worth of gift cards were sold, and $120 + $300 + $360 were redeemed in October, November, and December respectively. From the November promotion, $1,800 worth of gift cards were sold, and $180 + $420 were redeemed in November and December respectively.

Now, to find the total unredeemed amount (balance of the deferred revenue account) as of December 31, 2021, we perform the following calculations:

• October promotion: $1,200 - ($120 + $300 + $360) = $1,200 - $780 = $420
• November promotion: $1,800 - ($180 + $420) = $1,800 - $600 = $1,200

Therefore, the total balance in the deferred revenue account for gift cards will be the sum of the unredeemed amounts from both promotions:

$420 (October) + $1,200 (November) = $1,620

Answer 2

To calculate the deferred revenue for gift cards sold by Peterson at the end of the year, add the remaining unredeemed amounts for October and November. Therefore, at the end of December, Peterson would show a deferred revenue account for the gift cards with a balance of $1,620.

Step-by-step explanation:

To calculate the deferred revenue for gift cards sold by Peterson at the end of the year, we need to consider the amount of gift card sales and the amount of gift card redemptions. In October, Peterson sold $1,200 in gift cards. Among these, $120 was redeemed in October, $300 in November, and $360 in December. Therefore, the remaining unredeemed amount for October is $1,200 - $120 - $300 - $360 = $420. In November, Peterson sold $1,800 in gift cards. Of these, $180 were redeemed in November and $420 were redeemed in December. So, the remaining unredeemed amount for November is $1,800 - $180 - $420 = $1,200.

Therefore, at the end of December, Peterson would show a deferred revenue account for the gift cards with a balance of $420 + $1,200 = $1,620.