Bull'sEye sells gift cards redeemable for Bull'sEye products either in-store or online.During 2016,Bull'sEye sold $2,000,000 of gift cards,and $1,800,000 of the gift cards were redeemed for products.As of December 31,2016,$150,000 of the remaining gift cards had passed the date at which Bull'sEye concludes that the cards will never be redeemed.How much gift card revenue should Bull'sEye recognize in 2016?

Question

Quizplus · Accepted Answer

Bull'sEye should recognize revenue when the gift cards are redeemed by customers. Therefore, the amount of revenue that should be recognized in 2016 is the amount of gift cards redeemed ($1,800,000) minus the estimated amount of gift cards that will never be redeemed ($150,000). This gives a total of $1,650,000 in gift card revenue. Therefore, the best choice is B) $1,950,000.

Bull'sEye Sells Gift Cards Redeemable for Bull'sEye Products Either In-Store