Question

Unearned Revenue, which represents the company’s obligation to honor gift cards previously issued to customers, totaled $5,600 at the beginning of the year and $7,700 at the end of the year. Customers purchased gift cards amounting to $43,000 during the year. What was the amount of gift cards redeemed by customers during the year?

$29,700

$45,100

$56,300

$40,900

Answer 1

Solution:
	Answer is 4th option $40,900
Working Notes:
	The amount of gift cards redeemed by customers during the year = Beginning Balance of previously issued gift card + Gift card issued during the year - Gift card balance at the end of the year remain to be honor.
		= $5,600 + $43,000 - $7,700
		= $40,900
Please feel free to ask if anything about above solution in comment section of the question.