Question

Question: P18-8 (LO2,3) (Time Value, Gift Cards, Discounts) Presented below are two independent revenue arrangements for Colbert Company.

Instructions

Respond to the requirements related to each revenue arrangement.

(b) Colbert sells 20 nonrefundable \(100 gift cards for 3D printer paper on March 1, 2017. The paper has a standalone selling price of \)100 (cost $80). The gift cards expiration date is June 30, 2017. Colbert estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows.

	Redemption total
March 31	50%
April 30	80
June 30	85

Prepare the 2017 journal entries related to the gift cards at March 1, March 31, April 30, and June 30.

Short answer

Answer

Both sides of the Journal total$5,060.

Step-by-step solution

Definition of Non-Refundable

The fees taken by any institute or any consultant which is not subjected to be refunded in any case is known as non-refundable.

Journal entries for 2017

Date	Accounts and Explanation	Debit $	Credit $
1 March 2017	Cash	$2,000
	Unearned sales revenue		$2,000
31 March 2017	Unearned sales revenue	$1,000
	Sales revenue		$1,000
31 March 2017	Cost of goods sold	$800
	Inventory		$800
30 April 2017	Unearned sales revenue	$600
	Sales revenue		$600
30 April 2017	Cost of goods sold	$480
	Inventory		$480
30 June 2017	Unearned sales revenue	$100
	Sales revenue		$100
30 June 2017	Cost of goods sold	$80
	Inventory		$80
		$5,060	$5,060