Question

Cersei Inc. sold $2,700 in gift cards during a special promotion on October 18, 2019, and sold $4,050 in gift cards on November 18, 2019. Of the cards sold in October, $270 were redeemed in October, $675 in November, and $810 in December. Of the gift cards sold in November, $405 were redeemed in November and $945 were redeemed in December. All gift cards expire two months after purchase and the comapny recognizes revenue related to gift card breakage at that time. At 12/31/2019, Cersei's deferred revenue account would report a balance of:

Answer 1

$2,700

Step-by-step explanation:

Computation of the given data are as follows:

October sales = $2,700

November sales = $4,050

As the expiry of cards is of 2 months.

Then, of the sale of November,

Redemption in November = $405

Redemption in December = $945

So, Deferred revenue = November sales - November sales - Redemption in December

= $4,050 - $405 -$945

= $2,700