Uselessstuff.com sells various electronic items online. The company also sells gift cards that can be used to purchase items from the Uselessstuff.com website. These cards cannot be redeemed for cash. At the beginning of 2015, Uselessstuff.com had a balance of $85,000 in its gift card liability account. During 2015, it sold $250,000 in gift cards and $70,000 worth of gift cards were redeemed for merchandise that cost Uselessstuff.com $35,000. It is estimated that 1.5% of the gift card liability at the end of 2015 wont be redeemed by customers.

a. Prepare the journal entries to record to sale of gift cards and redemption of gift cards in 2015

b. Record the yearend adjusting entry to record the gift cards that wont be redeemed.

c. What is the 2015 yearend balance in the gift card liability account after the above adjusting entry?

d. How would the sale of gift cards affect the current ratio?