Accounting for Gift Cards Assume Ikeo Inc. sold $220,000 of gift cards during the last two weeks of December 2020. No gift cards were redeemed in 2020, while $198,000 of the gift cards were redeemed for store purchases during 2021. On December 31, 2021, Ikeo Inc. calculates the remaining balance of unredeemed gift cards of $22,000 ($220,000 less $198,000). Based on previous experiences, Ikeo estimates gift card breakage to be 5% of total gift card sales. Ikeo uses the proportional method to recognize income on gift card breakage. Required a. Record the sale of gift cards in 2020. b. Record the redemption of gift cards in 2021. c. Record revenue in 2021 due to gift card breakage using the proportional method. Note: Do not round until your final answers. Round your final answers to the nearest whole dollar. Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). a. Account Name Dr. Cr. b. C. Cash Accounts Receivable Inventory Accounts Payable Accr Assu 2020 calci Ikeo Equipment gift Copyright Req Accrued Compensation a. R Deferred Gift Card Revenue b. R c. Re Interest Payable Not Salaries Payable Not Sales Taxes Payable answ Warranty Liability Note Payable Discount on Note Payable gift cards during the last two weeks of December 2020. No gift cards were redeemed in ds were redeemed for store purchases during 2021. On December 31, 2021, Ikeo Inc. of unredeemed gift cards of $10,000 ($100,000 less $90,000). Based on previous experiences, to be 5% of total gift card sales. Ikeo uses the proportional method to recognize income on Estimated Litigation Liability 2020. ards in 2021. gift card breakage using the proportional method. itions; round the final answer to the nearest dollar. sn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. Dr. Cr. a. 100,000 0 Asset Retirement Obligation Sales Revenue 0 100,000 b. 90,000 0 Gift Card Breakage Revenue Warranty Revenue 0 90,000 Cost of Goods Sold 4,737 0 Interest Expense 0 4,737 Legal Expense Salaries Expense Warranty Expense Gain on Litigation Settlement Loss on Litigation Settlement N/A Next >