Johnson Lighting sold $1,000 worth of gift cards on special promotion on October 15, 2014, and...
Question:
Johnson Lighting sold $1,000 worth of gift cards on special promotion on October 15, 2014, and sold $1,500 worth of gift cards on another special promotion on November 15, 2014. Of the cards sold in October, $100 were redeemed in October, $250 in November, and $300 in December. Of the cards sold in November, $150 were redeemed in November and $350 were redeemed in December. Johnson views the probability of redemption of a gift card as remote if the card has not been redeemed within one year.
On 12/31/2014, Johnson would show an unearned revenue account for their gift cards with a balance of:
a. $0
b. $1,000
c. $1,350
d. $1,500
Unearned Revenue:
Unearned Revenue is a current liability account with a normal credit balance. The account increases on the credit side when revenue is received from customers before it is earned and decreases on the debit side when earned revenues are recorded.
Answer and Explanation: 1
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View this answerThe correct option is c. $1,350.
On 12/31/2014, the Unearned Revenue balance must be the total of all the unredeemed gift cards, because none of the...
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Unearned Revenue in Accounting: Definition & Examples
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Chapter 5 / Lesson 33
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Understand what unearned revenue is. Learn the definition of unearned revenue and how to calculate unearned revenue with the help of relevant examples.
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