Question

g In Lizzie Shoes’ experience, gift cards that have not been redeemed within 12 months are not likely to be redeemed. Lizzie Shoes sold gift cards for $19,500 during August 2021. $5,000 of cards were redeemed in September 2021, $3,390 in October, $3,080 in November, and $2,380 in December 2021. In 2022 an additional $1,250 of cards were redeemed in January and $680 in February. How much gift card revenue associated with the August 2021 gift card sales would Lizzie get to recognize in 2021 and 2022?

Answer 1

Answer:

2021

Due to the Accrual principle in Accounting, the revenue for 2021 will be the gift cards that were earned (redeemed) in 2021.

= 5,000 + 3,390 + 3,080 + 2,380

= $13,850

2022

Any gift cards that have not been redeemed within 12 months are not likely to be redeemed so the remaining gift cards can be said to be redeemed in 2022 which would mean that the revenue in 2022 is;

= 19,500 - 13,850

= $5,650