Schlegel Department Store sells gift certificates-redeemable for store merchandise-that expire one year after their issuance.Schlegel has the following information pertaining to its gift certificates sales and redemptions:
$\begin{array}{lr}
\text { Unredeemed certificates at } 12 / 31 / 13 & \$ 90,000 \
2014 \text { sales } & 400,000 \
2014 \text { redemptions of prior year sales } & 60,000 \
2014 \text { redemptions of current year sales } & 325,000
\end{array}$
Schlegel's experience indicates that 10% of gift certificates will not be redeemed.The company's policy is to record revenue on gift certificates when they are redeemed or expire.
Required:
In its 2014 income statement,what amount should Schlegel report as gift certificate revenue?

Question

Schlegel Department Store sells gift certificates-redeemable for store merchandise-that expire one year after their issuance.Schlegel has the following information pertaining to its gift certificates sales and redemptions:
$\begin{array}{lr}
\text { Unredeemed certificates at } 12 / 31 / 13 & \$ 90,000 \
2014 \text { sales } & 400,000 \
2014 \text { redemptions of prior year sales } & 60,000 \
2014 \text { redemptions of current year sales } & 325,000
\end{array}$ 
Schlegel's experience indicates that 10% of gift certificates will not be redeemed.The company's policy is to record revenue on gift certificates when they are redeemed or expire.
Required:
In its 2014 income statement,what amount should Schlegel report as gift certificate revenue?

Quizplus · Accepted Answer

The Answer of Schlegel Department Store sells gift certificates-redeemable for store merchandise-that expire one year after their issuance.Schlegel has the following information pertaining to its gift certificates sales and redemptions:
$\begin{array}{lr}
\text { Unredeemed certificates at } 12 / 31 / 13 & \$ 90,000 \
2014 \text { sales } & 400,000 \
2014 \text { redemptions of prior year sales } & 60,000 \
2014 \text { redemptions of current year sales } & 325,000
\end{array}$ 
Schlegel's experience indicates that 10% of gift certificates will not be redeemed.The company's policy is to record revenue on gift certificates when they are redeemed or expire.
Required:
In its 2014 income statement,what amount should Schlegel report as gift certificate revenue?

Schlegel Department Store Sells Gift Certificates-Redeemable for Store Merchandise-That Expire