Crane Bakery began selling gift cards in 2025. Based on industry norms, they expect that 30% of the gift cards will not be redeemed. In 2025, the bakery sold gift cards with a value of $2000. During that period, gift cards with a value of $500 were redeemed. The amount of revenue that Crane will recognize in 2025 with regard to the gift cards is O $650 O $500 O $2000 O $714
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A:
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![Crane Bakery began selling gift cards in 2025. Based on industry norms, they expect that 30% of the gift cards will not be redeemed. In
2025, the bakery sold gift cards with a value of $2000. During that period, gift cards with a value of $500 were redeemed. The amount
of revenue that Crane will recognize in 2025 with regard to the gift cards is
O $650
O $500
O $2000
O $714](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F592c7c15-627d-4945-b1f8-6591acd98aa4%2F3f57d75e-7e9a-45f4-8463-62f3db601ff8%2Fa8i369_processed.jpeg&w=3840&q=75)
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- ABC began a gift card program in January 2023 and sold $15,350 of gift cards in January, $17,950 in February, and $20,950 in March 2023 before discontinuing further gift card sales. During 2023, gift card redemptions were $8,700 for the January gift cards sold, $4,650 for the February cards, and $6,300 for the March cards. ABC considers gift cards to be “broken” (a remote probability of redemption) 10 months after sale. What liability for deferred revenue associated with gift card sales would ABC show as of December 31, 2023? a) 6,300 b) 20,950 c) 54,250 d) 14,650Pharoah sells 100 nonrefundable $50 gift cards for 3D printer paper on February 28, 2020. The paper has a standalone selling price of $50 (cost $36). The gift cards expiration date is June 30, 2020. Pharoah estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows. Redemption Total March 31 30 % April 30 75 June 30 90Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the cost recovery method to recognize revenue on these installment sales. In 2020, Lake began operations and sold jet skis with a total price of $630,000 that cost Lake $315,000. Lake collected $210,000 in 2020, $210,000 in 2021, and $210,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1,380,000 that cost Lake $828,000. Lake collected $460,000 in 2021, $260,000 in 2022, and $260,000 in 2023 associated with those sales. In 2023, Lake also repossessed $400,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $150,000 at the time they were repossessed. In 2020, Lake would recognize realized gross profit…
- Your answer is partially correct. Nash Taco Palace sells 320 gift cards at $60 per gift card and 160 of the gift cards are redeemed by year-end. Nash estimates that it will have 10% breakage on its gift cards. Prepare the entry for the gift card redemption and the expected breakage for the gift cards in the current year. (Ignore Cost of Goods Sold.) (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List oll debit entries before credit entries. Round intermediate calculations to 4 decimal places, eg. 0.2456 and final answers to 0 decimal places, eg. 5,125) Account Titles and Explanation Unearned Gift Card Revenue Sales Revenue Sales Revenue (Breakage) eTextbook and Media. Debit Credit 9600Bavarian Bar and Grill opened for business in November 2021. During its first two months of operation, the restaurant sold gift cards in various amounts totaling $5,200, mostly as Christmas presents. They are redeemable for meals within two years of the purchase date, although experience within the industry indicates that 80% of gift cards are redeemed within one year. Gift cards totaling $1,300 were presented for redemption during 2021 for meals having a total price of $2,100. The sales tax rate on restaurant sales is 4%, assessed at the time meals (not gift cards) are purchased. Sales taxes will be remitted in January.Required:1. Prepare the appropriate journal entries (in summary form) for the gift cards and meals sold during 2021 (keeping in mind that, in actuality, each sale of a gift card or a meal would be recorded individually).2. Determine the liability for gift cards to be reported on the December 31, 2021, balance sheet.3. What is the appropriate classification (current or…Flint Taco Palace sells 280 gift cards at $50 per gift card and 140 of the gift cards are redeemed by year-end. Flint estimates that it wi have 10% breakage on its gift cards. Prepare the entry for the gift card redemption and the expected breakage for the gift cards in the current year. (Ignore Cost of Goods Sold.) (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually. List all debit entries before credit entries. Round intermediate calculations to 4 decimal places, eg. 0.2456 and final answers to 0 decimal places, e.g. 5,125.) Account Titles and Explanation Cash Unearned Gift Card Revenue Subscriptions Revenue. Debit 14000 Credit 7000 7000
- Wildhorse Inc. began selling game consoles on November 1, 2024. The company offers a 60-day warranty for defective merchandise. Based on past experience with other similar products, Wildhorse estimates that 2.10% of the units sold will become defective in the warranty period, and that the average cost of replacing or repairing a defective unit is $22. In November, Wildhorse sold 34,000 units and 480 defective units were returned. In December, Wildhorse sold 61.000 units and 550 defective units were returned. The actual cost of replacing the defective units was $18,128. (a) Your Answer Correct Answer ✓ Your answer is correct Prepare a journal entry to accrue for the estimated warranty costs for the November and December sales at December 31, 2024. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry for the account titles and enter O for the amounts List debit entry before credit entry) (b) Date…(Customer Loyalty Program) Martz Inc. has a customer loyalty program that rewards a customer with 1 customer loyalty point for every $10 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2017, customers purchase products for $300,000 (with a cost of $171,000) and earn 30,000 points redeemable for future purchases. Martz expects 25,000 points to be redeemed. Martz estimates a standalone selling price of $2.50 per point (or $75,000 total) on the basis of the likelihood of redemption. The points provide a material right to customers that they would not receive without entering into a contract. As a result, Martz concludes that the points are a separate performance obligation.Instructions(a) Determine the transaction price for the product and the customer loyalty points.(b) Prepare the journal entries to record the sale of the product and related points on July 2, 2017.(c) At the end of the first reporting period (July 31, 2017), 10,000 loyalty…On July 10, 2020, Cheyenne Music sold CDs to retailers on account and recorded sales revenue of $658,000 (cost $506, 660). Cheyenne grants the right to return CDs that do not sell in 3 months following delivery. Past experience indicates that the normal return rate is 15%. By October 11, 2020, retailers returned CDs to Cheyenne and were granted credit of $80,000. Prepare Cheyenne's journal entries to record (a) the sale on July 10, 2020, and (b) $80,000 of returns on October 11, 2020, and on October 31, 2020. Assume that Cheyenne prepares financial statement on October 31, 2020. (To record sales) (To record cost of goods) (To record sales returns) (To record cost of goods returned)
- Halifax Manufacturing allows its customers to return merchandise for any reason up to 90 days after delivery and receive a credit to their accounts. All of Halifax's sales are for credit (no cash is collected at the time of sale). The company began 2024 with a refund liability of $420,000. During 2024, Halifax sold merchandise on account for $12,700,000. Halifax's merchandise costs are 60% of merchandise selling price. Also during the year, customers returned $619,000 in sales for credit, with $342,000 of those being returns of merchandise sold prior to 2024, and the rest being merchandise sold during 2024. Sales returns, estimated to be 5% of sales, are recorded as an adjusting entry at the end of the yearCircuitTown commenced a gift card program in January 2024 and sold $10,000 of gift cards in January, $15,000 in February, and $16,000 in March 2024 before discontinuing further gift card sales. During 2024, gift card redemptions were $6,000 for the January gift cards sold, $4,500 for the February cards, and $4,000 for the March cards. CircuitTown considers gift cards to be “broken” (not redeemable) 10 months after sale. Required: How much revenue will CircuitTown recognize with respect to January gift card sales during 2024? Prepare journal entries to record the sale of January gift cards, redemption of gift cards (ignore sales tax), and breakage (expiration) of gift cards. How much revenue will CircuitTown recognize with respect to March gift card sales during 2024? What liability for deferred revenue associated with gift card sales would CircuitTown show as of December 31, 2024?Problem 9. At December 31, 2021, Cactus Co. had 10,000 gift certificates outstanding which had been sold to customers during 2021 for P100 each. Cactus operates on a gross margin of 60% of its sales. What amount of revenue pertaining to the 10,000 outstanding gift certificates should be deferred at December 31, 2021?
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