The following are three independent situations. 1. Pearl Rewards Inc. provides rewards services to licensees. Pearl records service revenue related to rewards (granted as reward vouchers, which can be redeemed at a variety of retailers) and recognizes the cost of redemptions in the year vouchers are sold to licensees. Pearl's past experience indicates that only 80% of the vouchers sold to licensees will be redeemed. Pearl's liability for stamp redemptions was $12,841.600 at December 31, 2024. Additional information for 2025 is as follows. Service revenue from vouchers sold to licensees Cost of redemptions (vouchers sold prior to 1/1/25) $8,755,100 5,521,500 If all the vouchers sold in 2025 were presented for redemption in 2026, the redemption cost would be $5.569.900, What amount should Pearl report as a liability for voucher redemptions at December 31, 2025? Liability for stamp redemptions at December 31, 2025 $
The following are three independent situations. 1. Pearl Rewards Inc. provides rewards services to licensees. Pearl records service revenue related to rewards (granted as reward vouchers, which can be redeemed at a variety of retailers) and recognizes the cost of redemptions in the year vouchers are sold to licensees. Pearl's past experience indicates that only 80% of the vouchers sold to licensees will be redeemed. Pearl's liability for stamp redemptions was $12,841.600 at December 31, 2024. Additional information for 2025 is as follows. Service revenue from vouchers sold to licensees Cost of redemptions (vouchers sold prior to 1/1/25) $8,755,100 5,521,500 If all the vouchers sold in 2025 were presented for redemption in 2026, the redemption cost would be $5.569.900, What amount should Pearl report as a liability for voucher redemptions at December 31, 2025? Liability for stamp redemptions at December 31, 2025 $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following are three independent situations.
1. Pearl Rewards Inc. provides rewards services to licensees. Pearl records service revenue related to rewards (granted as reward
vouchers, which can be redeemed at a variety of retailers) and recognizes the cost of redemptions in the year vouchers are sold to
licensees. Pearl's past experience indicates that only 80% of the vouchers sold to licensees will be redeemed. Pearl's liability for stamp
redemptions was $12,841,600 at December 31, 2024. Additional information for 2025 is as follows.
Service revenue from vouchers sold to licensees
Cost of redemptions (vouchers sold prior to 1/1/25)
$8,755,100
5,521,500
If all the vouchers sold in 2025 were presented for redemption in 2026, the redemption cost would be $5.569.900. What amount
should Pearl report as a liability for voucher redemptions at December 31, 2025?
Liability for stamp redemptions at December 31, 2025 $
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