During February, the last month of the fiscal year, Be My Valentine Ltd. sells $20,400 of gift cards. From experience, management estimates that 8% of the gift cards sold will not be redeemed by customers. In March, $4,600 of these cards is redeemed for merchandise with a cost of $3,100. In April, further $11,500 of these cards is redeemed for merchandise with a cost of $3,800. The company uses a perpetual inventory system. Also in February, Be My Valentine had $1,000 of unused gift cards that were over one year old and were not expected to be used. The amount was in line with the company's normal breakage and all other gift cards of the same age had been used. Prepare journal entries to record the transactions for February, March, and April. (Enter debit entries first followed by credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 125.) Date Feb. Account Titles and Explanation Cash Gift Card Liability (Cash received for gift cards) Debit 20,400 Credit 20,400
During February, the last month of the fiscal year, Be My Valentine Ltd. sells $20,400 of gift cards. From experience, management estimates that 8% of the gift cards sold will not be redeemed by customers. In March, $4,600 of these cards is redeemed for merchandise with a cost of $3,100. In April, further $11,500 of these cards is redeemed for merchandise with a cost of $3,800. The company uses a perpetual inventory system. Also in February, Be My Valentine had $1,000 of unused gift cards that were over one year old and were not expected to be used. The amount was in line with the company's normal breakage and all other gift cards of the same age had been used. Prepare journal entries to record the transactions for February, March, and April. (Enter debit entries first followed by credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 125.) Date Feb. Account Titles and Explanation Cash Gift Card Liability (Cash received for gift cards) Debit 20,400 Credit 20,400
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:During February, the last month of the fiscal year, Be My Valentine Ltd. sells $20,400 of gift cards. From experience, management
estimates that 8% of the gift cards sold will not be redeemed by customers. In March, $4,600 of these cards is redeemed for
merchandise with a cost of $3,100. In April, further $11,500 of these cards is redeemed for merchandise with a cost of $3,800. The
company uses a perpetual inventory system.
Also in February, Be My Valentine had $1,000 of unused gift cards that were over one year old and were not expected to be used. The
amount was in line with the company's normal breakage and all other gift cards of the same age had been used.
Prepare journal entries to record the transactions for February, March, and April. (Enter debit entries first followed by credit entries.
Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No
entry" for the account titles and enter O for the amounts. Round answers to O decimal places, e.g. 125.)
Date
Feb.
Account Titles and Explanation
Cash
Gift Card Liability
(Cash received for gift cards)
Debit
20,400
Credit
20,400
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