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:
Regal’s experience indicates that 10% of gift certificates sold will not be redeemed.
Required:
In its December 31, 2008, balance sheet, what amount should Regal report as unearned revenue?

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Unredeemed at 12/31/07 2008 sales 2008 redemptions of prior year sales 2008 redemptions of current year sales $ 75,000 250,000 25,000 175,000