Question

Robin Corporation begins the year with a balance of $300,000 in unearned revenue related to unredeemed gift cards. During the year, $800,000 in gift cards expiring in 18 months are sold, of which $600,000 worth of gift cards have been redeemed in the same year. Another $50,000 in gift cards expired during the year and was transferred to revenue. Which of the following is the amount of revenue Robin earned from gift cards during the period?

Group of answer choices

$300,000

$500,000

$650,000

$800,000

$600,000

Answer 1

Correct answer-----$650,000.

.

Gift cards are considered as unearned revenue because cash are received against the issue if gift cards and some obligations are left to be done by the issuer. This obligation is equivalent to service to be rendered.

Gift cards are considered as revenue earned when gift cards are redeemed or considered expired or otherwise transferred to earned revenue.

The amount redeemed during year $60000 plus $50,000 transferred to due to expiry are considered as revenue earned.

answered by: anonymous