Georgia's Salon

The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020.
-Refer to Georgia's Salon. On May 31, 2020, all but $1,500 of the gift cards had been redeemed for salon services. What is the impact on the accounting equation of recording the expired gift cards?

Question

Georgia's Salon
 
The salon sells $50,000 of gift cards in May 2019. These gift cards may be used anytime before their expiration on May 31, 2020.
-Refer to Georgia's Salon. On May 31, 2020, all but $1,500 of the gift cards had been redeemed for salon services. What is the impact on the accounting equation of recording the expired gift cards?

Quizplus · Accepted Answer

When the gift cards expire, the liability to provide services is removed (liabilities decrease), and the amount becomes revenue, increasing stockholders' equity.

Georgia's Salon The Salon Sells $50,000 of Gift Cards in May 2019