Prepare the journal entry needed for the February

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Question - During December 2020, The Gap Ltd. sells $19,000 of gift cards to customers. From reliable past experience, management estimates that 9% of the gift cards sold will not be redeemed by customers. In January 2021, $2,000 of these cards is redeemed for merchandise with a cost of $1,500. In February 2021, a further $11,000 of these cards is redeemed for merchandise with a cost of $7,000. The company uses a perpetual inventory system and has a February 28 year end.

Instructions -

a. Prepare the journal entry needed for December 2020.

b. Prepare the journal entry needed for the January 2021 redemptions. Round to the nearest dollar.

c. Prepare the journal entry needed for the February 2021 redemptions. Round to the nearest dollar.d. What amount, if any, will appear on the SFP concerning gift cards at February 28, 2021?

Reference no: EM132730053

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