Question

Moretti Department Store sells gift cards that expire three years from the date of purchase. During 2019, Moretti sold $50,000 of gift cards, of which $1,500 were redeemed during 2021. At the end of 2021, it is estimated that approximately $800 of the 2019 balance remains unused, and Moretti concludes that it will never be redeemed. Moretti sold another $55,000 of gift cards in 2020, of which $22,000 were redeemed in 2021, and $60,000 of gift cards in 2021, of which $40,000 were redeemed in 2021.

Answer 1

Answer:

$64,300

Explanation:

The amount of revenue that Moretti Department store should recognize as revenue in 2021 should be based on the redeemed amount in the year and unused balance:

1. $1,500 were redeemed during 2021

2. $800 2019 balance remains unused

3. $22,000 were redeemed in 2021

4. $40,000 were redeemed in 2021

Total Revenue for 2021 = $64,300