Question

Waterway sells 20 nonrefundable $90 gift cards for 3D printer paper on March 1, 2020. The paper has a standalone selling price of $90 (cost $72). The gift cards expiration date is June 30, 2020. Waterway estimates that customers will not redeem 10% of these gift cards. The pattern of redemption is as follows. March 31 April 30 June 30 Redemption Total 50 % 80 85 Prepare the 2020 journal entries related to the gift cards at March 1, March 31. April 30, and June 30. (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 for the amounts. Round present value factor calculations to 5 decimal places, es 1.25124 and the final answer too decimal places es 58,971) Account Titles and Explanation Debit Credit Date Mar. 1.2020 Cashi Cash Uneamed Sales Revenue M31.2020 Unearned Sales Revenue

Answer 1

Journal Entries :-

Date	Particulars	Debit($)	Credit($)
March 1	Cash A/c (20*$90)	1800
	Gift Card Liability A/c		1800
	(Being Record Sale of Gift Card Liability)
March 1	Gift Card Liability A/c (20*$90*10%)	180
	Revenue A/c		180
	(Being Record Non Redemption Gift Card)
March 31	Gift Card Liability A/c (20*$90*50%)	900
	Sales A/c		900
	(Being Record Customer redemption of Gift Card)
	Cost of Goods Sold A/c (20*$72*50%)	720
	Inventory A/c		720
	(Being Record Gift Card At Cost of Goods Sold)
April 30	Gift Card Liability A/c (20*$90*(80%-50%))	540
	Sales A/c		540
	(Being Record Customer redemption of Gift Card)
	Cost of Goods Sold A/c (20*$72*(80%-50%))	432
	Inventory A/c		432
	(Being Record Gift Card At Cost of Goods Sold)
June 30	Gift Card Liability A/c (20*$90*(85%-80%))	90
	Sales A/c		90
	(Being Record Customer redemption of Gift Card)
	Cost of Goods Sold A/c (20*$72*(85%-80%))	72
	Inventory A/c		72
	(Being Record Gift Card At Cost of Goods Sold)
June 30	Gift Card Liability A/c (20*$90*(90%-85%))	90
	Revenue A/c		90
	(Being Record Balance Non Redemption Gift Card)