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nearned Income: Gallery Department Store sells gift certificates redeemable for store merchandise. The certificates expire one year after their issuance. Gallery has the following information pertaining to its gift certificates sales and redemptions: Unearned at December 31, 2005                                               600,000 2006 sales                                                                                  2,000,000 2006 redemptions of prior-year sales                                      200,000 2006 redemptions of current-year sales                                 1,400,000                 Gallery’s experience indicates that 10% of gift certificates sold will not be redeemed.         Requirement: In its December 31, 2006 statement of financial pos

nearned Income: Gallery Department Store sells gift certificates redeemable for store merchandise. The certificates expire one year after their issuance. Gallery has the following information pertaining to its gift certificates sales and redemptions: Unearned at December 31, 2005                                               600,000 2006 sales                                                                                  2,000,000 2006 redemptions of prior-year sales                                      200,000 2006 redemptions of current-year sales                                 1,400,000                 Gallery’s experience indicates that 10% of gift certificates sold will not be redeemed.         Requirement: In its December 31, 2006 statement of financial pos

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Unearned Income: Gallery Department Store sells gift certificates redeemable for store merchandise. The certificates expire one year after their issuance. Gallery has the following information pertaining to its gift certificates sales and redemptions:

Unearned at December 31, 2005                                               600,000

2006 sales                                                                                  2,000,000

2006 redemptions of prior-year sales                                      200,000

2006 redemptions of current-year sales                                 1,400,000

                Gallery’s experience indicates that 10% of gift certificates sold will not be redeemed.

        Requirement: In its December 31, 2006 statement of financial position what amount should Gallery report as unearned revenue?

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