During February, the last month of the fiscal year, Be My Valentine Ltd. sells $22,800 of gift cards. From experience, management estimates that 8% of the gift cards sold will not be redeemed by customers. In March, $6,900 of these cards is redeemed for merchandise with a cost of $5,200. In April, further $11,500 of these cards is redeemed for merchandise with a cost of $3,800. The company uses a perpetual inventory system. Also in February, Be My Valentine had $1,000 of unused gift cards that were over one year old and were not expected to be used. The amount was in line with the company's normal breakage and all other gift cards of the same age had been used. Prepare journal entries to record the transactions for February, March, and April. (Enter debit entries first followed by credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round answers to decimal places, e.g. 125.) Debit Credit Date Feb. Account Titles and Explanation Cash 22800 22800 Gift Card Liability (Cash received for gift cards) (To record breakage) (Gift cards redeemed for merchandise) (To record cost of merchandise) (To record breakage) (Gift cards redeemed for merchandise) (To record cost of merchandise) (To record breakage) How much income (if any) was earned in each of these months? (Round answers to 0 decimal places, e.g. 125.) February $ March $ April $ $ $ Sales revenue Cost of goods sold Gross margin $ $ $ What liability (if any) would appear on the company's statement of financial position at the end of each of these months? (Round answers to 0 decimal places, e.g. 125.) $ Balance, February 28 $ Balance, March 31 $ Balance, April 30 During February, the last month of the fiscal year, Be My Valentine Ltd. sells $22,800 of gift cards. From experience, management estimates that 8% of the gift cards sold will not be redeemed by customers. In March, $6,900 of these cards is redeemed for merchandise with a cost of $5,200. In April, further $11,500 of these cards is redeemed for merchandise with a cost of $3,800. The company uses a perpetual inventory system. Also in February, Be My Valentine had $1,000 of unused gift cards that were over one year old and were not expected to be used. The amount was in line with the company's normal breakage and all other gift cards of the same age had been used. Prepare journal entries to record the transactions for February, March, and April. (Enter debit entries first followed by credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Round answers to decimal places, e.g. 125.) Debit Credit Date Feb. Account Titles and Explanation Cash 22800 22800 Gift Card Liability (Cash received for gift cards) (To record breakage) (Gift cards redeemed for merchandise) (To record cost of merchandise) (To record breakage) (Gift cards redeemed for merchandise) (To record cost of merchandise) (To record breakage) How much income (if any) was earned in each of these months? (Round answers to 0 decimal places, e.g. 125.) February $ March $ April $ $ $ Sales revenue Cost of goods sold Gross margin $ $ $ What liability (if any) would appear on the company's statement of financial position at the end of each of these months? (Round answers to 0 decimal places, e.g. 125.) $ Balance, February 28 $ Balance, March 31 $ Balance, April 30
