Question: Regal Department Store sells gift certificates redeemable for store merchandise

Regal Department Store sells gift certificates redeemable for store merchandise that expire one year after their issuance. Regal has the following information pertaining to its gift certificates sales and redemptions:
Unredeemed at 12/31/13 ............ $ 75,000
2014 sales ................. 250,000
2014 redemptions of prior year sales ...... 25,000
2014 redemptions of current year sales ...... 175,000
Regal’s experience indicates that 10% of gift certificates sold will not be redeemed.

Required:
In its December 31, 2014, balance sheet, what amount should Regal report as unearned revenue?


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  • CreatedSeptember 10, 2014
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