At December 31, 2014, Sue's Boutique had 1,000 gift certificates outstanding, which had been sold to customers during 2014 for $60 each. Sue's operates on a gross profit of 60% of its sales. What amount of revenue pertaining to the 1,000 outstanding gift certificates should be deferred at December 31, 2014?

Question

Quizplus · Accepted Answer

Revenue from the sale of gift certificates should be deferred until the gift certificates are redeemed or expire. Since the gift certificates are still outstanding, the entire amount collected from their sale, which is 1,000 certificates at $60 each, totaling $60,000, should be deferred.

At December 31, 2014, Sue's Boutique Had 1,000 Gift Certificates