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1 January, 09:39

CircuitTown commenced a gift card program in January 2018 and sold $12,900 of gift cards in January, $19,950 in February, and $19,800 in March of 2018 before discontinuing further gift card sales. During 2018, gift card redemptions were $8,400 for the January gift cards sold, $5,700 for the February cards, and $5,550 for the March cards. CircuitTown considers gift cards to be "broken" (not redeemable) 10 months after sale. Required: 1. How much revenue will CircuitTown recognize with respect to January gift card sales during 2018

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  1. 1 January, 10:38
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    Answer: $12,900

    Explanation:

    Given that,

    sold gift cards in January = $12,900

    sold gift cards in February = $19,950

    sold gift cards in March = $19,800

    During 2018, gift card redemptions were:

    January = $8,400

    February = $5,700

    March = $5,550

    Revenue recognized in 2018 with respect to January gift card sales:

    = Gift card redemption in January + Gift card breakage

    = $8,400 + ($12,900 - $8,400)

    = $8,400 + $4,500

    = $12,900

    Out of this $8,400 will be gift card redemption and $4,500 gift card breakage.
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