Question

USPS delivers mail to 153 million ,In September 205 a customer purchases a roll of 100 forever stamps for $ 49. Postal service estimates 5% not used.Indicate when the USPS should record revenue and provide a reason for your answer

Answer 1

USPS, on the initial sale of 100 forever stamps for $49, will record it as a liability under the accounting head “deferred revenue – prepaid postage”. The amount of money earned from the sale of forever stamps is a liability as the revenue has not been actually earned and represents a product (in the form of pre-paid stamps) that are owed to a customer.

It is only when the customer uses the stamps that the ‘revenue’ account will be credited and the ‘deferred revenue’ account will be debited. It should be noted that the amount of revenue that will eventually be recorded will be $49*(1-5%) = $46.55. This is because 5% of the stamps are estimated to not to be used.