Question

Circuit Town commenced a gift card program in January 2018 and sold $10,000 of gift cards in January, $15,000 in February, and $16,000 in March of 2018 before discontinuing further gift card sales. During 2018, gift card redemptions were $6,000 for the January gift cards sold, $4,500 for the February cards, and $4,000 for the March cards. Circuit Town considers gift cards to be "broken" (not redeemable) 10 months after sale. Required: 1. How much revenue will CircuitTown recognize with respect to January gift card sales during 2018? 2. Prepare journal entries to record the sale of January gift cards, redemption of gift cards (ignore sales tax), and breakage (expiration) of gift cards. 3. How much revenue will Circuit Town recognize with respect to March gift card sales during 2018? 4. What liability for deferred revenue associated with gift card sales would Circuit Town show as of December 31, 2018? Complete this question by entering your answers in the tabs below. Reg 2 Req 1 3 and 4 How much revenue will Circuit Town recognize with respect to January gift card and March gift card sales during 2018. What liability for deferred revenue associated with gift card sales would Circuit Town show as of December 31, 2018? Revenue recognized from January gift card sales Revenue recognized from March gift card sales Year-end deferred revenue liability

Answer 1

- Answer 1. Revenue will be recognized by circuit Town with respect to January Gift Card sales during 2018 - Circuito Town will recognize revenue of $ 10,000 from Gift Card Sale in January 2018. $10,000 will be recognized as revenue from $6000 from the gift card redemption and $ 4000 from the gift card broken. Therefore, cirupit Town will $10000 revenue from Gift Card Sale during the January 2018. 2. Joynal Entry to record sale of January gift cards, Redemption of Gift Cards and brekage (expirgt) on) of gift cards. Circuit Town Company - Journal Entry Particul qus | Debit (+) Credit () [Pale Sunyawa I Cash Al - 10000 Сооо - ov19000 - To unearned Gift Card Revenue Ale (Being to record sale of Gift Card) Onearned Gift Carl Revenue Alc o y 1. To sales - Gift cards (Being to record relemption of gift cardsy 2 Unearned Gift Card Revenue Ne To sales - Gift Cards (Being to record breakage (expluation of Gift Cards I 6000 I 4000 Yooo 20000 20000 Total a. Revenue will be recognized by circuit Town with respect to March Gift Card sales in 2018 circuit Town company will recognize revenue from gift card sqles in March 2018 for $ 4000. During the march 2018, the total gift card sales is $16000 of which $4000 redeemed such redeemed $4000 gift card sales will be recognize as a revenue in March and remaining $ 12000 gift card sales will not be recognized as they are not expired for next 10 months ie upto the Jonyqy 2015 Liability for Deferred Revenue associgled with Gift God sales would circuit Town shown as of December 31, 2018 - The liability for deferred revenue is & 12000 which is not expired in March 2018 on the December 31, 2018. They are expired in January 2014. on December 11, 2018 they are unexpired as they are in Tyny quy 2019.

- The 1sses 9 : Revenue recognized from January gift card sales | Revenue Recognized from March Gift Card sgles 13. Yeqo - End Deferred Revenue Ligbility. F 19000 $ 4000 $ 12000