Question
During December 2023, Soft Skin Ltd. sells $20,000 of gift cards to customers. From reliable past experience, management estimates that 8% of the gift cards
During December 2023, Soft Skin Ltd. sells $20,000 of gift cards to customers. From reliable past experience, management estimates that 8% of the gift cards sold will not be redeemed by customers. In January 2024, $2,000 of these cards is redeemed for merchandise with a cost of $1,500. In February 2024, a further $10,000 of these cards is redeemed for merchandise with a cost of $8,000. The company uses a perpetual inventory system and has a February 28 year end.
Instructions: a. Prepare the journal entry needed for December 2023. b. Prepare the journal entry needed for the January 2024 redemptions. Round to the nearest dollar. c. Prepare the journal entry needed for the February 2024 redemptions. Round to the nearest dollar. d. What amount, if any, will appear on the SFP concerning gift cards at February 28, 2024?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started