SM Department Store sells gift certifications redeemable only when merchandise is purchased. These gift certificates have an expiration date of two years after issuance date.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

SM Department Store sells gift certifications redeemable only when merchandise is purchased. These gift certificates have an expiration date of two years after issuance date.


The unearned revenue account relating to gift certificates has a beginning balance of P65,000 and the sale of gift certificates during the year 2017 was likewise credited to this account. The balance of the unearned revenue account as at year end totaled P300,000, before any adjustment for the recognition of the revenue. 


You verified that during the year, P15,000 worth of gift certificates expired and the total of gift certificates that were redeemed was P200,000.


Compute for the correct balance of the Unearned Revenue for Gift Certificates Outstanding as of December 31, 2017.

P200,000
P200,000

P15,000
P15,000

None of these
None of these

P300,000
P300,000

P85,000 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Knowledge Booster
Sales Tax, Restaurant Tax and Lodging Taxes
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education