Bull's Eye Department Stores, Inc

Multiple Choice

Bull's Eye Department Stores, Inc. records $170,000 in gift card sales and receives cash in year 1. Customers redeemed 25% of the gift cards to purchase merchandise in year 1. The company estimates breakage as 13% and uses the proportional method. How much breakage revenue should be recorded at the end of year 1? (Round any intermediary percentages two decimal places, X.XX%. Round your final answer to the nearest dollar.)

A) $22,100
B) $42,500
C) $5,525
D) $6,352