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The marketing department of Cullumber and Company has developed a strategy to increase sales. For every $100 of purchases made by a customer, the customer receives a $5 gift card with no expiration date. Cullumber assumes the redemption rate on the gift card is 90%. Cullumber has the following information: ● ● . Sales of $8,400,000 for 2025 Gift card redemptions of $50,400 for 2025 Gift card liability at December 31, 2024 of $42,000 What is the amount of the liability at December 31, 2025?

The marketing department of Cullumber and Company has developed a strategy to increase sales. For every $100 of purchases made by a customer, the customer receives a $5 gift card with no expiration date. Cullumber assumes the redemption rate on the gift card is 90%. Cullumber has the following information: ● ● . Sales of $8,400,000 for 2025 Gift card redemptions of $50,400 for 2025 Gift card liability at December 31, 2024 of $42,000 What is the amount of the liability at December 31, 2025?

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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The marketing department of Cullumber and Company has developed a strategy to increase sales. For every $100 of purchases made by a customer, the customer receives a $5 gift card with no expiration date. Cullumber assumes the redemption rate on the gift card is 90%. Cullumber has the following information: ● ● ● Sales of $8,400,000 for 2025 Gift card redemptions of $50,400 for 2025 Gift card liability at December 31, 2024 of $42,000 What is the amount of the liability at December 31, 2025? Gift card liability, Dec. 31, 2025 $
Transcribed Image Text:The marketing department of Cullumber and Company has developed a strategy to increase sales. For every $100 of purchases made by a customer, the customer receives a $5 gift card with no expiration date. Cullumber assumes the redemption rate on the gift card is 90%. Cullumber has the following information: ● ● ● Sales of $8,400,000 for 2025 Gift card redemptions of $50,400 for 2025 Gift card liability at December 31, 2024 of $42,000 What is the amount of the liability at December 31, 2025? Gift card liability, Dec. 31, 2025 $
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