Earned Video Rental Revenue on Account

Journals

Accountants use special forms called
journals
to proceed track of their business transactions. A journal is the first identify data is entered into the accounting organization. A journal is oft referred to every bit the
book of original entry
because information technology is the place the data originally enters into the system. A periodical keeps a historical business relationship of all recordable transactions with which the company has engaged. In other words, a journal is similar to a diary for a business organization. When you enter information into a journal, we say you are
journalizing
the entry. Journaling the entry is the 2nd step in the accounting cycle. Here is a picture show of a journal.

You tin can encounter that a periodical has columns labeled debit and credit. The debit is on the left side, and the credit is on the right. Let’s look at how we utilize a periodical.

When filling in a periodical, there are some rules yous need to follow to meliorate journal entry organisation.

Recording Transactions

We now return to our company example of Press Plus, Lynn Sanders’ printing service company. We will analyze and record each of the transactions for her business and discuss how this impacts the financial statements. Some of the listed transactions have been ones we take seen throughout this chapter. More than item for each of these transactions is provided, along with a few new transactions.

1. On January iii, 2019, issues $20,000 shares of mutual stock for cash.
2. On January 5, 2019, purchases equipment on account for $3,500, payment due within the month.
3. On January nine, 2019, receives $iv,000 cash in accelerate from a client for services non nonetheless rendered.
4. On January x, 2019, provides $5,500 in services to a customer who asks to be billed for the services.
5. On January 12, 2019, pays a $300 utility pecker with cash.
6. On Jan fourteen, 2019, distributed $100 cash in dividends to stockholders.
7. On January 17, 2019, receives $two,800 greenbacks from a customer for services rendered.
8. On January xviii, 2019, paid in full, with cash, for the equipment purchase on January 5.
9. On Jan twenty, 2019, paid $3,600 cash in salaries expense to employees.
10. On January 23, 2019, received cash payment in full from the customer on the January 10 transaction.
11. On Jan 27, 2019, provides $i,200 in services to a customer who asks to be billed for the services.
12. On January 30, 2019, purchases supplies on business relationship for $500, payment due within 3 months.

Transaction 1:
On Jan three, 2019, issues $xx,000 shares of common stock for cash.

Assay:

• This is a transaction that needs to be recorded, as Printing Plus has received money, and the stockholders have invested in the business firm.
• Press Plus now has more cash. Cash is an asset, which in this case is increasing. Greenbacks increases on the debit side.
• When the company problems stock, stockholders buy common stock, yielding a higher common stock figure than before issuance. The common stock account is increasing and affects equity. Looking at the expanded accounting equation, nosotros meet that Common Stock increases on the credit side.

Impact on the financial statements:
Both of these accounts are rest canvas accounts. You volition see full avails increase and total stockholders’ disinterestedness will as well increase, both by $20,000. With both totals increasing past $20,000, the bookkeeping equation, and therefore our balance canvass, will be in remainder. In that location is no effect on the income statement from this transaction every bit at that place were no revenues or expenses recorded.

Transaction ii:
On January 5, 2019, purchases equipment on business relationship for $3,500, payment due within the month.

Assay:

• In this case, equipment is an nugget that is increasing. It increases considering Printing Plus now has more equipment than it did before. Avails increase on the debit side; therefore, the Equipment account would show a $iii,500 debit.
• The company did not pay for the equipment immediately. Lynn asked to exist sent a bill for payment at a future date. This creates a liability for Printing Plus, who owes the supplier money for the equipment. Accounts Payable is used to recognize this liability. This liability is increasing, equally the visitor now owes money to the supplier. A liability account increases on the credit side; therefore, Accounts Payable volition increase on the credit side in the amount of $3,500.

Touch on on the financial statements:
Since both accounts in the entry are balance sheet accounts, yous will run into no effect on the income statement.

Transaction iii:
On January 9, 2019, receives $4,000 greenbacks in advance from a customer for services non yet rendered.

Analysis:

• Cash was received, thus increasing the Cash account. Greenbacks is an asset that increases on the debit side.
• Printing Plus has not yet provided the service, meaning it cannot recognize the revenue as earned. The company has a liability to the client until it provides the service. The Unearned Revenue account would be used to recognize this liability. This is a liability the company did not accept before, thus increasing this account. Liabilities increase on the credit side; thus, Unearned Revenue will recognize the $iv,000 on the credit side.

Bear on on the fiscal statements:
Since both accounts in the entry are remainder sheet accounts, you volition see no consequence on the income statement.

Transaction 4:
On Jan ten, 2019, provides $five,500 in services to a client who asks to be billed for the services.

Analysis:

• The company provided service to the customer; therefore, the company may recognize the acquirement equally earned (acquirement recognition principle), which increases acquirement. Service Revenue is a revenue account affecting disinterestedness. Revenue accounts increase on the credit side; thus, Service Revenue will show an increase of $5,500 on the credit side.
• The client did not immediately pay for the services and owes Printing Plus payment. This money will exist received in the future, increasing Accounts Receivable. Accounts Receivable is an asset business relationship. Asset accounts increment on the debit side. Therefore, Accounts Receivable volition increase for $5,500 on the debit side.

Impact on the financial statements:
You take revenue of $5,500. Acquirement is reported on your income statement. The more revenue you have, the more net income (earnings) you will have. The more earnings y’all have, the more retained earnings y’all will keep. Retained earnings is a stockholders’ equity account, so total disinterestedness will increase $five,500. Accounts receivable is going upward so total assets will increase by $5,500. The accounting equation, and therefore the balance sheet, remain in residuum.

Transaction v:
On Jan 12, 2019, pays a $300 utility bill with greenbacks.

Analysis:

• Greenbacks was used to pay the utility beak, which ways greenbacks is decreasing. Cash is an asset that decreases on the credit side.
• Paying a utility bill creates an expense for the company. Utility Expense increases, and does and then on the debit side of the bookkeeping equation.

Impact on the financial statements:
Y’all have an expense of $300. Expenses are reported on your income statement. More than expenses atomic number 82 to a subtract in cyberspace income (earnings). The fewer earnings you lot have, the fewer retained earnings you volition terminate upwards with. Retained earnings is a stockholders’ equity business relationship, so total equity will decrease by $300. Greenbacks is decreasing, so total avails will decrease by $300, impacting the rest sail.

Transaction 6:
On January 14, 2019, distributed $100 greenbacks in dividends to stockholders.

Assay:

• Greenbacks was used to pay the dividends, which means greenbacks is decreasing. Cash is an asset that decreases on the credit side.
• Dividends distribution occurred, which increases the Dividends account. Dividends is a part of stockholder’s disinterestedness and is recorded on the debit side. This debit entry has the effect of reducing stockholder’s disinterestedness.

Impact on the fiscal statements:
You have dividends of $100. An increase in dividends leads to a subtract in stockholders’ equity (retained earnings). Cash is decreasing, so total assets will subtract by $100, impacting the balance sheet.

Transaction 7:
On January 17, 2019, receives $2,800 cash from a customer for services rendered.

Analysis:

• The customer used cash as the payment method, thus increasing the amount in the Greenbacks account. Cash is an nugget that is increasing, and it does and so on the debit side.
• Press Plus provided the services, which ways the company can recognize revenue as earned in the Service Revenue account. Service Revenue increases disinterestedness; therefore, Service Acquirement increases on the credit side.

Impact on the fiscal statements:
Acquirement is reported on the income statement. More acquirement volition increase net income (earnings), thus increasing retained earnings. Retained earnings is a stockholders’ equity business relationship, then total equity will increment $ii,800. Cash is increasing, which increases total assets on the balance sheet.

Transaction 8:
On January eighteen, 2019, paid in full, with cash, for the equipment purchase on January five.

Assay:

• Greenbacks is decreasing because it was used to pay for the outstanding liability created on January 5. Cash is an asset and will decrease on the credit side.
• Accounts Payable recognized the liability the visitor had to the supplier to pay for the equipment. Since the company is at present paying off the debt it owes, this will subtract Accounts Payable. Liabilities decrease on the debit side; therefore, Accounts Payable will decrease on the debit side by $iii,500.

Impact on the fiscal statements:
Since both accounts in the entry are residual sheet accounts, you volition meet no issue on the income statement.

Transaction 9:
On January 20, 2019, paid $3,600 greenbacks in salaries expense to employees.

Assay:

• Cash was used to pay for salaries, which decreases the Greenbacks account. Cash is an nugget that decreases on the credit side.
• Salaries are an expense to the business for employee work. This will increase Salaries Expense, affecting equity. Expenses increment on the debit side; thus, Salaries Expense will increase on the debit side.

Impact on the financial statements:
You have an expense of $three,600. Expenses are reported on the income statement. More expenses lead to a decrease in net income (earnings). The fewer earnings you have, the fewer retained earnings you will end upwards with. Retained earnings is a stockholders’ disinterestedness account, so total equity will decrease past $3,600. Cash is decreasing, then total assets will subtract past $3,600, impacting the balance sheet.

Transaction x:
On January 23, 2019, received cash payment in total from the customer on the Jan 10 transaction.

Analysis:

• Cash was received, thus increasing the Cash business relationship. Cash is an asset, and assets increase on the debit side.
• Accounts Receivable was originally used to recognize the futurity client payment; now that the customer has paid in full, Accounts Receivable will decrease. Accounts Receivable is an nugget, and assets subtract on the credit side.

Impact on the financial statements:
In this transaction, there was an increase to one asset (Greenbacks) and a subtract to another asset (Accounts Receivable). This means full avails change past $0, because the increment and decrease to assets in the same amount cancel each other out. At that place are no changes to liabilities or stockholders’ disinterestedness, so the equation is still in balance. Since at that place are no revenues or expenses affected, there is no effect on the income statement.

Transaction 11:
On Jan 27, 2019, provides $1,200 in services to a customer who asks to be billed for the services.

Analysis:

• The customer does non pay immediately for the services but is expected to pay at a future date. This creates an Accounts Receivable for Printing Plus. The customer owes the money, which increases Accounts Receivable. Accounts Receivable is an asset, and assets increase on the debit side.
• Printing Plus provided the service, thus earning acquirement. Service Revenue would increase on the credit side.

Bear upon on the financial statements:
Revenue is reported on the income statement. More acquirement will increase net income (earnings), thus increasing retained earnings. Retained earnings is a stockholders’ equity business relationship, so total equity volition increase $1,200. Cash is increasing, which increases total assets on the rest sheet.

Transaction 12:
On January 30, 2019, purchases supplies on business relationship for $500, payment due within three months.

Analysis:

• The company purchased supplies, which are assets to the business until used. Supplies is increasing, considering the company has more than supplies than it did before. Supplies is an nugget that is increasing on the debit side.
• Printing Plus did not pay immediately for the supplies and asked to be billed for the supplies, payable at a later date. This creates a liability for the company, Accounts Payable. This liability increases Accounts Payable; thus, Accounts Payable increases on the credit side.

Impact on the financial statements:
At that place is an increment to a liability and an increase to avails. These accounts both bear on the remainder canvass but non the income argument.

The complete journal for these transactions is as follows:

We now expect at the next step in the bookkeeping cycle, step three: post journal information to the ledger.

Posting to the General Ledger

Call back that the general ledger is a record of each business relationship and its residuum. Reviewing periodical entries individually tin be tedious and time consuming. The general ledger is helpful in that a visitor can easily excerpt account and balance information. Hither is a small department of a general ledger.

You can see at the top is the name of the account “Greenbacks,” as well as the assigned account number “101.” Call back, all asset accounts will start with the number 1. The date of each transaction related to this account is included, a possible clarification of the transaction, and a reference number if available. There are debit and credit columns, storing the financial figures for each transaction, and a balance column that keeps a running full of the residuum in the account later on every transaction.

Let’due south wait at one of the journal entries from Press Plus and fill in the corresponding ledgers.

Every bit yous tin can meet, at that place is one ledger account for Cash and some other for Mutual Stock. Cash is labeled account number 101 because it is an asset business relationship type. The engagement of January three, 2019, is in the far left cavalcade, and a clarification of the transaction follows in the next cavalcade. Greenbacks had a debit of $twenty,000 in the periodical entry, so $20,000 is transferred to the general ledger in the debit column. The remainder in this account is currently $20,000, considering no other transactions take affected this account yet.

Mutual Stock has the aforementioned date and description. Common Stock had a credit of $20,000 in the journal entry, and that data is transferred to the general ledger business relationship in the credit column. The balance at that time in the Common Stock ledger account is $xx,000.

Another key element to understanding the general ledger, and the third step in the accounting cycle, is how to summate balances in ledger accounts.

Computing Business relationship Balances

When computing balances in ledger accounts, ane must take into consideration which side of the business relationship increases and which side decreases. To find the account balance, you lot must discover the divergence betwixt the sum of all figures on the side that increases and the sum of all figures on the side that decreases.

For example, the Cash account is an nugget. Nosotros know from the bookkeeping equation that assets increase on the debit side and decrease on the credit side. If there was a debit of $5,000 and a credit of $three,000 in the Greenbacks account, we would detect the divergence betwixt the two, which is $2,000 (v,000 – iii,000). The debit is the larger of the two sides ($5,000 on the debit side equally opposed to $3,000 on the credit side), so the Cash account has a debit balance of $2,000.

Another example is a liability account, such as Accounts Payable, which increases on the credit side and decreases on the debit side. If there were a $4,000 credit and a $2,500 debit, the difference between the two is $i,500. The credit is the larger of the two sides ($4,000 on the credit side as opposed to $2,500 on the debit side), so the Accounts Payable account has a credit balance of $ane,500.

The following are selected journal entries from Printing Plus that affect the Cash account. Nosotros will employ the Greenbacks ledger business relationship to summate account balances.

The full general ledger business relationship for Greenbacks would expect like the following:

In the concluding column of the Cash ledger account is the running balance. This shows where the business relationship stands subsequently each transaction, every bit well as the final balance in the account. How practice nosotros know on which side, debit or credit, to input each of these balances? Let’south consider the full general ledger for Greenbacks.

On January 3, at that place was a debit balance of $xx,000 in the Greenbacks account. On January nine, a debit of $4,000 was included. Since both are on the debit side, they will be added together to go a rest on $24,000 (every bit is seen in the residual column on the Jan 9 row). On January 12, in that location was a credit of $300 included in the Cash ledger business relationship. Since this figure is on the credit side, this $300 is subtracted from the previous balance of $24,000 to get a new balance of $23,700. The same procedure occurs for the residual of the entries in the ledger and their balances. The terminal remainder in the account is $24,800.

Checking to make sure the final balance figure is right; one tin review the figures in the debit and credit columns. In the debit cavalcade for this cash account, we see that the full is $32,300 (twenty,000 + iv,000 + 2,800 + five,500). The credit cavalcade totals $seven,500 (300 + 100 + three,500 + 3,600). The difference between the debit and credit totals is $24,800 (32,300 – 7,500). The balance in this Cash business relationship is a debit of $24,800. Having a debit residual in the Greenbacks account is the normal balance for that business relationship.

Posting to the T-Accounts

The third pace in the accounting cycle is to mail service periodical information to the ledger. To do this nosotros can use a T-account format. A visitor will take information from its journal and post to this general ledger. Posting refers to the process of transferring information from the periodical to the general ledger. It is important to understand that T-accounts are only used for illustrative purposes in a textbook, classroom, or business organization discussion. They are non official accounting forms. Companies will utilize ledgers for their official books, not T-accounts.

Allow’s look at the periodical entries for Printing Plus and mail each of those entries to their respective T-accounts.

The following are the journal entries recorded earlier for Printing Plus.

Transaction 1:
On Jan iii, 2019, issues $xx,000 shares of common stock for cash.

In the journal entry, Cash has a debit of $xx,000. This is posted to the Cash T-account on the debit side (left side). Common Stock has a credit rest of $20,000. This is posted to the Common Stock T-business relationship on the credit side (correct side).

Transaction 2:
On January 5, 2019, purchases equipment on account for $3,500, payment due inside the month.

In the journal entry, Equipment has a debit of $3,500. This is posted to the Equipment T-account on the debit side. Accounts Payable has a credit balance of $3,500. This is posted to the Accounts Payable T-account on the credit side.

Transaction iii:
On January 9, 2019, receives $four,000 cash in advance from a customer for services not yet rendered.

In the journal entry, Cash has a debit of $4,000. This is posted to the Cash T-account on the debit side. You lot will notice that the transaction from Jan 3 is listed already in this T-account. The adjacent transaction effigy of $4,000 is added directly below the $20,000 on the debit side. Unearned Revenue has a credit balance of $4,000. This is posted to the Unearned Acquirement T-account on the credit side.

Transaction 4:
On January 10, 2019, provides $5,500 in services to a customer who asks to be billed for the services.

In the journal entry, Accounts Receivable has a debit of $5,500. This is posted to the Accounts Receivable T-account on the debit side. Service Acquirement has a credit balance of $5,500. This is posted to the Service Revenue T-account on the credit side.

Transaction 5:
On January 12, 2019, pays a $300 utility nib with cash.

In the journal entry, Utility Expense has a debit residual of $300. This is posted to the Utility Expense T-business relationship on the debit side. Cash has a credit of $300. This is posted to the Cash T-account on the credit side. You will detect that the transactions from Jan 3 and January ix are listed already in this T-account. The next transaction figure of $300 is added on the credit side.

Transaction 6:
On January 14, 2019, distributed $100 cash in dividends to stockholders.

In the periodical entry, Dividends has a debit residuum of $100. This is posted to the Dividends T-account on the debit side. Cash has a credit of $100. This is posted to the Greenbacks T-business relationship on the credit side. You volition detect that the transactions from Jan iii, January 9, and January 12 are listed already in this T-account. The adjacent transaction figure of $100 is added directly below the January 12 record on the credit side.

Transaction seven:
On January 17, 2019, receives $2,800 cash from a customer for services rendered.

In the journal entry, Cash has a debit of $2,800. This is posted to the Cash T-account on the debit side. You will notice that the transactions from January iii, January nine, January 12, and January 14 are listed already in this T-account. The next transaction figure of $two,800 is added directly below the January 9 record on the debit side. Service Revenue has a credit balance of $2,800. This also has a balance already from Jan ten. The new entry is recorded nether the January 10 record, posted to the Service Revenue T-account on the credit side.

Transaction 8:
On January 18, 2019, paid in full, with cash, for the equipment purchase on January 5.

On this transaction, Cash has a credit of $3,500. This is posted to the Cash T-account on the credit side below the January 14 transaction. Accounts Payable has a debit of $3,500 (payment in full for the Jan. five buy). You notice at that place is already a credit in Accounts Payable, and the new record is placed directly across from the Jan 5 record.

Transaction 9:
On January xx, 2019, paid $3,600 cash in salaries expense to employees.

On this transaction, Cash has a credit of $3,600. This is posted to the Cash T-business relationship on the credit side beneath the January 18 transaction. Salaries Expense has a debit of $3,600. This is placed on the debit side of the Salaries Expense T-account.

Transaction 10:
On January 23, 2019, received cash payment in full from the customer on the Jan 10 transaction.

On this transaction, Cash has a debit of $5,500. This is posted to the Cash T-account on the debit side beneath the January 17 transaction. Accounts Receivable has a credit of $five,500 (from the Jan. ten transaction). The record is placed on the credit side of the Accounts Receivable T-account beyond from the January 10 tape.

Transaction 11:
On Jan 27, 2019, provides $1,200 in services to a customer who asks to be billed for the services.

On this transaction, Accounts Receivable has a debit of $1,200. The record is placed on the debit side of the Accounts Receivable T-account underneath the January 10 record. Service Revenue has a credit of $1,200. The record is placed on the credit side of the Service Revenue T-account underneath the January 17 tape.

Transaction 12:
On January 30, 2019, purchases supplies on account for $500, payment due within three months.

On this transaction, Supplies has a debit of $500. This will get on the debit side of the Supplies T-account. Accounts Payable has a credit of $500. You notice in that location are already figures in Accounts Payable, and the new record is placed direct underneath the January 5 tape.

T-Accounts Summary

Once all journal entries have been posted to T-accounts, we can cheque to make sure the accounting equation remains counterbalanced. A summary showing the T-accounts for Printing Plus is presented in Figure iii.10.

Figure

iii.x


Summary of T-Accounts for Printing Plus. (attribution: Copyright Rice University, OpenStax, under CC Past-NC-SA 4.0 license)

The sum on the assets side of the accounting equation equals $30,000, institute past adding together the final balances in each nugget account (24,800 + 1,200 + 500 + 3,500). To find the total on the liabilities and equity side of the equation, nosotros need to find the deviation between debits and credits. Credits on the liabilities and equity side of the equation full $34,000 (500 + 4,000 + 20,000 + 9,500). Debits on the liabilities and equity side of the equation total $4,000 (100 + three,600 + 300). The difference $34,000 – $4,000 = $30,000. Thus, the equation remains balanced with $30,000 on the nugget side and $30,000 on the liabilities and disinterestedness side. Now that we have the T-business relationship information, and accept confirmed the accounting equation remains balanced, we tin can create the unadjusted trial remainder.

Your Turn

Journalizing Transactions

You lot have the following transactions the last few days of April.

Apr. 25	Yous cease by your uncle’s gas station to refill both gas cans for your visitor, Watson’s Landscaping. Your uncle adds the total of $28 to your account.
Apr. 26	You tape another week’south revenue for the lawns mowed over the by calendar week. You earned $1,200. You received cash equal to 75% of your acquirement.
April. 27	You pay your local newspaper $35 to run an advertisement in this week’s paper.
Apr. 29	You brand a $25 payment on account.

Table

3.24

1. Prepare the necessary journal entries for these 4 transactions.
2. Explain why you debited and credited the accounts you lot did.
3. What will be the new remainder in each business relationship used in these entries?

Solution

April 25

• You accept incurred more gas expense. This means you have an increase in the total amount of gas expense for Apr. Expenses become up with debit entries. Therefore, you will debit gas expense.
• You purchased the gas on business relationship. This volition increment your liabilities. Liabilities increment with credit entries. Credit accounts payable to increment the total in the business relationship.

April 26

• You accept received more than cash from customers, so you desire the full cash to increment. Cash is an nugget, and assets increase with debit entries, so debit cash.
• You also accept more money owed to you by your customers. Y’all have performed the services, your customers owe y’all the money, and you lot volition receive the money in the time to come. Debit accounts receivable as asset accounts increase with debits.
• You take mowed lawns and earned more revenue. Yous desire the total of your acquirement account to increase to reverberate this additional revenue. Revenue accounts increase with credit entries, and then credit backyard-mowing acquirement.

April 27

• Advertising is an expense of doing business. You have incurred more expenses, and so you lot want to increment an expense account. Expense accounts increment with debit entries. Debit advertizing expense.
• You paid cash for the advertising. You have less cash, so credit the cash account. Greenbacks is an asset, and asset business relationship totals decrease with credits.

Apr 29

• Yous paid “on account.” Think that “on account” means a service was performed or an item was received without being paid for. The customer asked to be billed. Yous were the customer in this case. Yous made a purchase of gas on account before in the month, and at that time you increased accounts payable to evidence you lot had a liability to pay this amount sometime in the time to come. You are now paying down some of the money y’all owe on that account. Since you paid this money, y’all now accept less of a liability so you desire to see the liability account, accounts payable, decrease by the amount paid. Liability accounts decrease with debit entries.
• You lot paid, which means you gave greenbacks (or wrote a check or electronically transferred) so you have less greenbacks. To decrease the full cash, credit the account considering asset accounts are reduced by recording credit entries.

Your Turn

Normal Business relationship Balances

Calculate the balances in each of the following accounts. Do they all accept the normal balance they should have? If not, which one? How practice you know this?

Solution

Recollect It Through

Gift Cards

Souvenir cards accept become an important topic for managers of whatsoever visitor. Understanding who buys gift cards, why, and when tin can be important in business planning. Besides, knowing when and how to determine that a souvenir card will not likely be redeemed will affect both the company’s residuum sheet (in the liabilities section) and the income statement (in the revenues section).

According to a 2017 holiday shopping report from the National Retail Federation, souvenir cards are the well-nigh-requested presents for the eleventh yr in a row, with 61% of people surveyed saying they are at the top of their wish lists.⁶
CEB TowerGroup
projects that total souvenir card book will reach $160 billion by 2018.⁷

How are all of these gift card sales affecting 1 of America’s favorite specialty java companies,
Starbucks?

In 2014 one in seven adults received a
Starbucks
gift carte du jour. On Christmas Eve solitary $2.5 million gift cards were sold. This is a rate of 1,700 cards per minute.^viii

The post-obit discussion about souvenir cards is taken from
Starbucks’s 2016 annual report:

When an amount is loaded onto a stored value card we recognize a corresponding liability for the full amount loaded onto the card, which is recorded within stored value card liability on our consolidated balance sheets. When a stored value card is redeemed at a visitor-operated store or online, we recognize revenue by reducing the stored value card liability. When a stored value menu is redeemed at a licensed store location, nosotros reduce the corresponding stored value menu liability and cash, which is reimbursed to the licensee. There are no expiration dates on our stored value cards, and in well-nigh markets, we do not accuse service fees that cause a decrement to customer balances. While we volition continue to award all stored value cards presented for payment, direction may determine the likelihood of redemption, based on historical feel, is accounted to exist remote for certain cards due to long periods of inactivity. In these circumstances, unredeemed card balances may be recognized as breakage income. In fiscal 2016, 2015, and 2014, we recognized breakage income of $sixty.5 million, $39.3 million, and $38.three million, respectively.⁹

Equally of Oct one, 2017,
Starbucks
had a full of $one,288,500,000 in stored value card liability.