Question

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 $18,000 during August 2021. $4,000 of cards were redeemed in September 2021, $3,000 in October, $2,500 in November, and $2,000 in December 2021. In 2022 an additional $1,000 of cards were redeemed in January and $500 in February. How much gift card revenue associated with the August 2021 gift card sales would Lizzie get to recognize in 2021 and 2022?

Answer 1

Lizzie Shoes would recognize a total of $12,000 in gift card revenue in 2021 and $1,500 in 2022.

Step-by-step explanation:

Lizzie Shoes would get to recognize the gift card revenue associated with the August 2021 gift card sales in both 2021 and 2022. According to Lizzie Shoes' experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. In this case, $4,000 of cards were redeemed in September 2021, $3,000 in October, $2,500 in November, and $2,000 in December 2021. So, the revenue associated with these redeemed cards would be recognized in 2021.

In 2022, an additional $1,000 of cards were redeemed in January and $500 in February. The revenue associated with these redeemed cards would be recognized in 2022.

Therefore, the total gift card revenue associated with the August 2021 gift card sales that Lizzie Shoes would recognize in 2021 and 2022 would be $12,000 ($4,000 + $3,000 + $2,500 + $2,000) in 2021 and $1,500 ($1,000 + $500) in 2022.

Answer 2

Step-by-step explanation:

In 2016, She should recognize 4000+3000+2500+2000=11500, because the gift cards in amount of $11500 were redeemed

In 2017, the remaining revenue should be recognized 18000-11500=6500