On 31 August 2021, a gift shop Kaynam Ltd. sold $8,000 worth of $100 gift cards to be claimed by 31 August 2022, and the gift card purchase was limited to one card per customer. The manager expects 10% of the gift cards to expire unredeemed. By 31 December 2021, 45 customers have claimed the gift cards.

Required:

Identify the Accounting Standard and the relevant paragraphs that define breakage revenue and set out the requirements for breakage revenue to be recognized. (1 mark)

Calculate the expected value to be claimed and the estimated breakage revenue when it comes to the gift cards expiry date. (1 mark)

What are the journal entries at the time of gift card purchase? (1 mark)

What are the journal entries at the end of the accounting period on 31 December 2021? (1 mark)

By 31 August 2022, another 29 gift cards have been claimed. Show the journal entry for the period 1 January to 31 August 2022. (2 marks)