In 20X1, 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 20X1, $200,000 of gift certificates had been redeemed.

Required:

In its December 31, 20X1, balance sheet, what amount should Regal report as a liability for unused gift certificates?