A B Question 3-Revenue Recognition (15 marks) 2 Please only enter your response in the blue cells. This is the only area that will be graded. 3 4 5 a) Revenue Recognition - Gift Cards (5 marks) D F 7 8 Relax Spa Inc. regularly sells gift cards for beauty services. Based on past redemption rates it estimates that 18% of all gift cards are NOT used. The total value of outstanding gift cards is $10,000. A customer redeems $150 on a gift card. Required: 9 10 1) Prepare the journal entry to record the initial sale of the $10,000 in gift cards on Jan 2. (2 marks) Date Account Titles Debit Credit 11 12 13 14 15 16 2) Prepare the journal entry to record the redemption of service of $150 on a gift card. (3 marks) Date Account Titles 17 18 19 20 21 22 23 24 25 b) Revenue Recognition - Long Term Contracts (2 marks) 26 Debit Credit 27 Required: 28 Explain one advantage and one disadvantage of the completed contract method of accounting for long term contracts. 30 Advantage: 31 4 E Cover Sheet Automatic Q1 Conceptual Framework Workbook Statistics Q2 Measurement Q3 Revenue Recognition Q4 Cash and AR +