Colombo Coffee sells gift cards that can be used at its 55 branches. During 2017, customers purchased $25,000 of gift cards, of which $3,000 were redeemed during 2018. It is estimated that a balance of $1,500 of cards sold in 2017 remains unused as of the end of 2018, and Colombo determines that this amount will never be redeemed, based on historical experience. During 2018, Colombo further sold $32,000 of gift cards, of which $26,000 were redeemed and $6,000 remain unused but may be used by customer in 2019.
Required:
How much gift card revenue should Colombo recognize in 2018?

Question

Quizplus · Accepted Answer

The Answer of Colombo Coffee sells gift cards that can be used at its 55 branches. During 2017, customers purchased $25,000 of gift cards, of which $3,000 were redeemed during 2018. It is estimated that a balance of $1,500 of cards sold in 2017 remains unused as of the end of 2018, and Colombo determines that this amount will never be redeemed, based on historical experience. During 2018, Colombo further sold $32,000 of gift cards, of which $26,000 were redeemed and $6,000 remain unused but may be used by customer in 2019.
Required:
How much gift card revenue should Colombo recognize in 2018?

Colombo Coffee Sells Gift Cards That Can Be Used at Its