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:

Unredeemed at 12/31/x2 - 75,000

20x3 sales - 250,000

20x3 redemptions of prior year sales - 25,000

20x3 redemptions of current year sales - 175,000

Regal's experience indicates that 10% of gift certificates sold will not be redeemed. In its December 31, 20x3 balance sheet, what amount should Regal report as unearned revenue? show the solution and explain.