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Cucu Company sells gift certificates redeemable only when merchandise is purchase. The certificates have an expiration date two years after issuance date. Upon redemption or expiration, Cucu Company recognizes the unearned revenue as realized. Data for 2020 are as follows: Unearned revenue, 1/1/2020 P800,000 Gift certificates sold 4,000,000 Gift certificates redeemed 3,200,000 Expired gift certificates 400,000 Cost of goods sold 60% At December 31, 2020, what amount of current liability should Cucu report in relation to gift certificates? a. P1,200,000 b. P800,000 c. P400,000 d. d. P0

Cucu Company sells gift certificates redeemable only when merchandise is purchase. The certificates have an expiration date two years after issuance date. Upon redemption or expiration, Cucu Company recognizes the unearned revenue as realized. Data for 2020 are as follows: Unearned revenue, 1/1/2020 P800,000 Gift certificates sold 4,000,000 Gift certificates redeemed 3,200,000 Expired gift certificates 400,000 Cost of goods sold 60% At December 31, 2020, what amount of current liability should Cucu report in relation to gift certificates? a. P1,200,000 b. P800,000 c. P400,000 d. d. P0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cucu Company sells gift certificates redeemable only when merchandise is purchase. The certificates have an
expiration date two years after issuance date. Upon redemption or expiration, Cucu Company recognizes the
unearned revenue as realized. Data for 2020 are as follows:
Unearned revenue, 1/1/2020 P800,000
Gift certificates sold 4,000,000
Gift certificates redeemed 3,200,000
Expired gift certificates 400,000
Cost of goods sold 60%
At December 31, 2020, what amount of current liability should Cucu report in relation to gift certificates?
a. P1,200,000 b. P800,000 c. P400,000 d. d. P0

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