Question

In 2019, its first year of operations, Regal Department Store sells $250,000 of gift certificates redeemable...

In 2019, its first year of operations, Regal Department Store sells $250,000 of gift certificates redeemable for store merchandise that expire one year after their issuance. With a high degree of certainty, Regal believes 10% of the gift certificates will not be redeemed. By the end of 2019, $200,000 of gift certificates had been redeemed.

Required:

  1. Complete the required journal entries for the gift certificate activity.
  2. In its December 31, 2019, balance sheet, what amount should Regal report as a liability for unused gift certificates?
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