The following facts relate to gift cards sold by Sunbru Coff…
The following facts relate to gift cards sold by Sunbru Coffee Company during 2027. Sunbru’s fiscal year ends on December 31.(a) In October 2027, sold $3,000 of gift cards, and redeemed $500 of those gift cards.(b) In November 2027, sold $4,000 of gift cards, and redeemed $1,400 of October gift cards and $700 of November gift cards.(c) In December 2027, sold $3,000 of gift cards, and redeemed $200 of October gift cards, $2,000 of November gift cards, and $400 of December gift cards.(d) Sunbru views a gift card to be “broken” (with a remote probability of redemption) two months after the end of the month in which it is sold. Thus, an unredeemed gift card sold at any time during July would be viewed as broken as of September 30.Required:Determine the balance of the deferred revenue liability to be reported in the December 31, 2027 balance sheet and the revenue from gift cards to be reported on the income statement for 2027. To receive partial credit, please show your work.Deferred Revenue: Gift Card Revenue:
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