question archive Regal Department Store sells gift certificates, redeemable for store merchandise, that expire one year after their issuance
Regal Department Store sells gift certificates, redeemable for store merchandise, that expire one year after their issuance
Subject:AccountingPrice: Bought3
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:
align="left">
|
Unredeemed at 12/31/05 |
$ 75,000 |
|
2006 sales |
250,000 |
|
2006 redemptions of prior year sales |
25,000 |
|
2006 redemptions of current year sales |
175,000 |
Regal’s experience indicates that 10% of gift certificates sold will not be redeemed. In its December 31, 2006 balance sheet, what amount should Regal report as unearned revenue?
- $125,000
- $112,500
- $100,000
- $ 50,000
