Bull's Eye Department Stores, Inc. records $170,000 in gift card sales and receives cash in year 1. Customers redeemed 25% of the gift cards to purchase merchandise in year 1. The company estimates breakage as 13% and uses the proportional method. How much breakage revenue should be recorded at the end of year 1? (Round any intermediary percentages two decimal places, X.XX%. Round your final answer to the nearest dollar.)

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Bull's Eye Department Stores, Inc. should record $6,352 in breakage revenue at the end of year 1. Breakage revenue = Gift card sales x Estimated breakage rate x Proportion of unredeemed gift cards= $170,000 x 13% x (1 - 25%)= $170,000 x 13% x 75%= $170,000 x 0.13 x 0.75= $170,000 x 0.0975= $16,575= $6,352 (rounded to the nearest dollar)