Answer and Explanation:
a. The computation of revenue is shown below:-
Revenue = Gift card redemption + Gift card breakage
= $6,000 + $4,000
= $10,000
b. The Journal entry is shown below:-
Cash Dr, $10,000
To Unearned Gift Card Revenue $10,000
(Being sale of the gift card is recorded)
2 Unearned Gift Card revenue Dr, $6,000
To Revenue - Gift Cards $6,000
(Being gift card redemption is recorded)
3. Unearned Gift Card revenue Dr, $4,000
To Revenue - Gift Cards $4,000
(Being gift card breakage is recorded)
c. The revenue is shown below:-
Only $4,000 will be recognized as revenue as it is the gift card redemption.
d. The computation of liability for deferred revenue is shown below:-
Liability for deferred revenue = $16,000 - $4,000
= $12,000
